Planning to list your investment property for sale?
Under favorable market conditions, selling your rental property could be lucrative. And you could also have properties in your portfolio that are not performing as you expected. In these cases, putting your investment property up for sale may be a smart step, explains T-Square Real Estate.
Selling this type of property comes with a set of unique challenges. When you plan and strategize in advance, you could save yourself a lot of time and money.
In this article, we’ll go over the top tips for selling your investment properties. By reading this piece, you’ll gain an understanding of the options you have for wasting less time and closing your sale more profitably.
Tip #1: Study the Market Situation
The first step before selling your investment property is conducting thorough research on the local market conditions. When you see great potential in how the market behaves, it’s important to communicate this to prospective buyers.
Map out the employment situation, occupancy rates, and the overall status of the rental market. Real estate investors would see more value in a property that is situated in a district with:
- Low unemployment rates
- High occupancy rates
- Favorable rental conditions
Tip #2: Understand the Tax Laws
Taxes on rental property sales differ from residential unit transactions. You need to find ways of utilizing the US Tax Code (Section 1031) in a financially sustainable way.
Making complete sense of these laws is essential for preventing a negative return on investment. It’s possible to defer paying capital gains taxes if you know how to work the regulations to the advantage of your business.
Tip #3: Stage Your Rental Property
Maximize the appeal of your rental property by using the services of a professional stager. The difference in perception between staged and unstaged properties may be tremendous.
Here are the main benefits of staging your rental unit:
- Depersonalization makes the property more appealing.
- You’ll sell your property quicker.
- Your stager will emphasize the key positive features of the rental property.
- Prospects might perceive that your home has a higher value.
Tip #4: Reduce Your Investment Property’s Expenses
One way to make your investment property more attractive is by reducing the monthly operating costs. When the cash flow improves, your property gets an instant boost in investor appeal.
There are numerous ways to minimize operating costs. For example, you could upgrade all the major appliances in the unit. Even though this involves an initial expense, the resulting savings are bound to impress your buyers.
Tip #5: Find the Right Price
Selling your rental property calls for figuring out the correct price. You want to hit the right spot between too expensive and undervalued. Both of these extremes would work against your best interest.
The groundwork for successful pricing is a comparative market analysis. Without going through with this, you won’t know what the optimal price for your investment property is. This analysis aims to figure out what have been the recent sales prices for similar properties in the same area.
Tip #6: Provide High-Quality Visuals
Hiring a professional real estate photographer is the best approach if you want to have high-quality photos accompanying your listing. And there are plenty of reasons to provide these photos.
Your prospective buyers are more encouraged to visit for a showing when they see photos that showcase the property’s selling points. Plus, taking great photos of a property has the potential to sell your rental unit quicker and for more money.
Tip #7: Prepare All the Documentation
Investors want to see all the stats linked to your rental property. The most important documents are those that concern the financial health of your unit. Make sure that your prospects have ready access to the budget and expense sheets and income data.
Additionally, hand over complete documentation regarding maintenance and repairs history. This should include a complete overview of capital expenditures. Transparency builds trust and helps your potential buyers to make the final decision.
In a Nutshell: Selling Your Investment Properties
Quite a few investment property owners face a big question: should I sell my investment? In many cases, it’s a sound plan that allows you to make further investments or cash out because of necessity.
You can take action to sell your investment property more successfully. Here are our top tips for making a quicker and more profitable transaction:
- Stage your rental property to improve its appeal.
- Provide plenty of visual materials in the property listings.
- Prepare all the documents, including the complete financial history.
- Understand the market situation and its implications on your sale.
- Conduct comparative market analysis to find the best price.
- Study the tax laws and regulations relevant to your situation.
- Cut the running expenses of your investment property.
Written for Merriman by Kellie Tollifson at T-Square Real Estate Services in Seattle.