Should you sell your home or investment property? Have you made the decision to sell your investment property? How do you sell your investment property? If you're going to sell, consider these points below before you put your property up for sale. The decision to sell your property is a tough one to make, so we've gathered these tips together to help you make the right choice when selling your property.
If interest are low, perhaps now is the time to sell your property. For one, you can get a good interest rate on a new loan for your new property. Secondly, if interest rates are low then you'll have more potential buyers who are seeking to buy property and take advantage of low interest rates.
Have a Plan
Just as you have a plan for buying an investment property you must have a plan for selling. Make sure you’re receiving the market rate for rents when you decide to sell. It’s better to have some vacancies with renters who are paying market rate rather than a large number of renters paying below market rents. The value of your property will be based on these most current totals. If needed, forewarn tenants that you are selling the property and need to increase the rental rates on each unit in the building or condo.
*Rent control is a factor in a number of areas, know this before you buy property.
Draw Down Expenses
Look for ways to reduce expenses when you’re planning to sell your property. Whether it’s cutting back on the advertising you’re doing, lowering your insurance deductible, or lessening the times the landscaping is done on your properties. Of course you still want to maintain the upkeep and look of the property, but cut out any unnecessary expenses. This will all reduce your expenses and increase the cash flow - which is one of the key factors of buying property for an investor. Drawing down expenses gives you more time to sell the property and also increases your cash flow.
The 1031 Exchange
Have an investment property you want to buy ready when you’re set to sell. You’ll need to move the money you’ve earned (the equity) into that property so you don’t have to pay a capital gains tax when you sell your current property. Buy a property of like kind and you can avoid paying capital gains taxes when you sell your property - lean more at 1031 exchanges.
Pricing Your Property
If you don’t price your property right you could lose out and end up holding the property for a long period of time—further exasperating your situation as the home or investment property becomes tagged as a property that should be discounted since it’s been on the market too long even if the value really hasn't decreased.
Figure out how fast you need to sell the property or home. Are you on the verge of foreclosing or have backup funds and can wait out the market a bit. You don't want to put your property up for sale during the winter months for example, when it's harder for people to come and view the property.
The Price of Your New Property
What also comes into play is the price you're going to pay for the new property or home you're going to buy, if that's your plan. If you are going to retire and not continue managing or owning a rental properties, then that's different. But if you are buying another property knowing how much you're going to pay for that property is a big factor.
You can afford to sell your property at a reduced rate if you're getting a good deal on the new property. It comes down to timing in many ways, if you have a buyer and find a property you like, sometimes it's ok to take less than you'd want when selling your property since you're buying a property you really like at a reasonable price.