5 Ways to Make Bank When Selling an Investment Property
You’re looking at your investment property and reflecting on the work put into it. Hopefully, the property has made you money, made tenants happy, and given you tax breaks. But now you’re ready to make an even bigger profit by selling the property. Everyone knows that home appreciation is one of the biggest gains that comes with real estate investing. Just make sure you’re gaining as much as possible.
Before listing your property, think carefully about why you want to sell and if your reasons are valid (smart).
Reasons You Should Sell Your Investment Property
1. You’re Not Making Money
If you’re not even breaking even on an investment property, that’s a reason to sell. Making money is the number one objective in real estate. Maybe your investment property was making money initially, but due to various reasons, it’s generating negative cash-flow. This can be from vacancies, damages, or costs have gone up too much like insurance or taxes. On the other hand, an investor could be making money but is anticipating some major repairs.
So definitely sell if you’re experiencing this, right? Well, understand the market conditions really well. You might be able to make more money by holding on to the property for a bit longer. Check out appreciation, rental rates, and future development plans. If these are going to increase soon, hold on to the property and consult an agent in the meantime.
2. You’re Moving On
If the investment property is making money, the changing factor could be you. Some investors don’t want to leave their property behind if they’re moving away or are just tired of dealing with property. Maybe you’re seeking a better investment property or a better opportunity. Fair. But, still you want to make sure you’re not selling at the wrong time and giving up what could be a opportunity to make money in real estate.
No matter what the scenario is, understanding market conditions is what should determine your decision, not your feelings. There are some investors who regret selling because rushed and should have waited, while there are others who waited too long because they thought “more time equals more money.”
Ways To Make Bank Selling An Investment Property
1. Hire An Agent
It might seem like an obvious suggestion, but hiring an agent will do at least two things for you: 1) save you time by taking care of logistics like showings, callings, and updating listing and 2) give you the market information you need and better advise you.
One example of how agents will help is setting the listing price. A lot of homeowners and investors will set the price way too high (above market value). However, agents will help owners set the price in order to start bidding wars (below market value), which allows the seller to list the investment property above market value, without turning buyers away from the get-go.
2. A Picture Is Worth A Thousand Dollars
A listing with crappy pictures doesn’t get attention. I can personally vouch for this, I close a listing after seeing more than three ugly pictures. Not all buyers are able to overlook the appearance of a property and think of the opportunity or value that lies underneath. Pictures are a magnet for sellers, so invest in the time to create high-quality, professional photos.
3. Give The People What They Want
If you really want to make a huge profit from selling your investment property, then know what buyers want. Whether it’s an updated kitchen, bathroom, outdoor space, or balcony. Spending money to renovate or make additions should get you a higher evaluation. Calculate it right though, don’t spend an insane amount of money on renovations and hurt your potential profit.
4. Fake It Til’ You Make Money
Stage the property and set the scene. This really isn’t as hard as it sounds. This can be done just be cleaning up, getting rid of clutter, and adding “magazine-like” elements. Make it easy for buyers to visualize the property for themselves or for their tenants.
5. Keep Your Money To Yourself
You might sell your investment property for a great profit, but there’s someone that wants a piece of the pie – the government. After an investors sells an asset, they have to pay capital gains tax. However, there are ways to legally avoid paying capital gains tax. Make sure to educate yourself about these different options and if there are any catches.
The key with making the most money from your investment property is letting data tell you when you should sell your investment property. Don’t miss out on an opportunity simply because of rushing to sell or lingering around for too long. Once you know the optimal time to sell, know your niche tenant market and appeal to them. If the property appeals to many people, bidding wars are undoubtedly going to occur, allowing you to get the selling price you want.