Tips to Sell Your Investment Property

Tips to Sell Your Investment Property

Many investors will not hang on to their properties forever. When it comes to divesting and offloading your investment properties, you’ll want to be sure to get the most out of them. This will involve a bit of legwork on your part, but it will also mean developing a strong relationship with the right real estate professional to help guide you throughout the process. Before you list your investment property, here are some tips to point you in the right direction.

Look for a qualified and experienced real estate professional

Whether you’re listing your primary home for sale or getting ready to offload investment properties, you’ll be better prepared by partnering with an experienced real estate agent. There are numerous ways an agent can best serve your needs, not the least of which is their handling the cumbersome closing process.

A true professional agent will also work hard to market your property. Even in a hot seller’s market, you’ll want the prospective buyers that view the property to be prequalified and vetted. This will save you a lot of time, and time is money.

And in a sluggish market for sellers, your agent will put their skills to work putting your property in sight of as many potential qualified buyers as possible. Their marketing skills will mean that your property stays listed for less time.

Additionally, properties that are listed for sale with a real estate professional sell for substantially more than those marketed “for sale by owner.” A 2021 report from the National Association of Realtors revealed that the average FSBO home sold for $260,000, while the average home listed by a realtor closed at $318,000. While agents and brokers take a commission off the top, the gains in a typical comparison between these two scenarios are much more than those commissions. It’s a win-win.

Speak to a financial professional about potential tax implications

As soon as you’ve decided on a real estate agent, you’ll want to sit down with a trusted financial advisor. If you are not settled on one, your real estate agent will have a vast network of referrals for virtually anyone you’d need during the sales process. Ask your agent who they would recommend, and be prepared with a list of questions.

Selling a home for more money than you put into it is the end goal. If you’ve done well with your investment property and are looking at making a great profit, you should be aware of the taxes that will be owed on the gains. The net proceeds from the sale of investment properties are considered capital gains by the federal tax code. Generally speaking, taxes on capital gains are taxed at lower rates than ordinary income tax, but not always.

If you haven’t held onto the property long enough, then the IRS will consider the gains (profit) as short-term. In this case, it would mean that the capital gains tax would match ordinary income taxes. But if you have held onto the investment property for long enough, the net profit from the sale will be taxed at the lower capital gains tax rate.

No matter how long you have held onto your property, it’s important to speak with someone whose job is to know the tax code inside and out. These regulations change often, and you’ll want the most current data available when you decide to sell your investment property.

Prepare and list your property on the market

Now that you’ve got a real estate agent and have your tax questions answered, it’s onto the part that will require some elbow grease. You’ll want to make the property as attractive as possible to potential buyers. This might include tasks that you will want to tackle on your own. Or, you might hire the work out to contractors. Either way, you’ll be better served if you walk through the property with your agent so that they can give you guidance on what needs to be done.

It’s generally recommended to catch up on any deferred maintenance items that have been put off. The less a home inspector has on their list later, the better. But you’ll want to do more than just take care of maintenance issues. You’ll also want to make the property shine inside and out. Painting the walls a neutral color, having a deep cleaning of the interior, and hiring a professional property stager are all things that will help you get your property sold quicker and for a higher amount. But don’t forget to take care of the outside! Keeping the lawn trimmed, the landscaping on point, and the exterior looking its best will go a long way in giving your property the curb appeal it will need to get it moved forward to closing.

Should you reinvest the proceeds?

Once your property has attracted the right buyer and the sale moves successfully through the closing process, you’ll hopefully have a sizable profit waiting for you to deposit. Now you’ll want to revisit the advice your financial professional imparted to you. Should you reinvest the proceeds into more real estate? Doing so can alleviate the tax implications under certain circumstances, as can investing that money into a primary residence. No matter where you place the profits from the sale of your investment property, having a sound plan that’s formulated with the guidance of experts is highly recommended.

Are you ready to take the first step?

Getting your investment property sold means taking that first step. Meeting with a real estate agent will help you craft a solid plan to get the property sold for the highest possible amount. Marie Babin has the experience and tools to help you maximize your gains and the marketing skills to get your investment property sold.

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We are dedicated to constant study of the Real Estate market along the Emerald Coast. This knowledge and our passion leads to unsurpassed service to our clients. Contact us today, we are honored to assist you!

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