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
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
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
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.