Investment properties are an excellent way to diversify your portfolio, but there could come a time to sell. Like now.
You could end up wanting to sell for any number of reasons:
- Seller’s market
- Asset liquidation
- Difficult tenants
- No or low return on investment
- Losing money on or stressed about upkeep
Navigating the Tampa Bay real estate market on your own can be difficult without a team behind you. If you’re considering selling your investment property, contact our team today. Don’t worry – we’ll help you understand the tax implications that come with selling property that you don’t live in full time. We will do an analysis of the best value for your property. Then, we’ll assist in finding qualified buyers ready to make an offer.
Selling Your Investment Property
Our team wants to see you succeed in selling your home. Here are some tips to help sell your investment property below:
Think About Your Tenants
If you don’t plan to transfer the lease agreement as part of the sale, then you need to think about your tenants.
If your investment property is being leased by renters, it’s best to honor the lease period for your tenants. If you’re not able to honor the lease for some reason – you should give them ample time to vacate. If needed, you can offer those tenants an incentive to vacate. Listing with tenants still in the home can make it more difficult to keep the home in show-ready condition and make scheduling showings more difficult.
Clean It Up: Repair Your Property Before Listing
While you might want to sell investment property as soon as possible, it’s also a good idea to make small improvements before you sell.
If your potential buyers know there are repairs to be made, they could bid below your asking price as a barter. It could be worth making those smaller fixes to get the most out of your sale. When you’re deciding whether or not to make repairs before selling, you have to ask yourself a few questions:
- What is the state of the real estate market?
- Are tenants living on your property?
- Will you be sacrificing rental income while making repairs?
The key is to know the difference between repairs and improvements. You don’t want to over-improve the property either.
One Recent Sale:
Was on the market for 2 days with 8 offers. We were able to sell the investment property $45K over asking price with no repairs.
What If I Sell My Investment to Zillow?
We get it, people see these commercials with Zillow and others that promote they will give an offer and no repairs needed. But as the seller, you actually lose money because there are normal homebuyers and flippers who will bid these numbers well over asking price and most do not require repairs.
The people in the commercials are getting those purchases without it hitting the market and helping them flip the house, saving them a ton of money and the seller losing out on money…
We feel any seller using them is losing out on a ton of money whether the investment property is in excellent condition or needs a total rehab.
Capital Gains Taxes
Investment properties are taxed differently than main residences when you sell. If you’re selling your main residence, you can make a large amount of profit ($250,000 if single or $500,000 if married) without owing taxes on the sale – if you’ve owned the house for two years or lived in it for two of the past five years.
Chances are, your rental property has appreciated in value over time – resulting in capital gain, the profit you earn when you sell. If you’ve not been living on your property, you won’t qualify for the “use” test of the capital gains exclusion. Any profit you make could be taxable (talk to your financial planner). However, if you owned the property for less than a year, the profits are considered short-term capital gains, which are taxed at the same rate as your income. If your taxable income is less than $80,000, you don’t have to pay capital gains taxes.
Another strategy to defer capital gains taxes is through a 1031 exchange. If you sell one property and buy another “like-kind” property, you can avoid capital gains tax. You can’t use a 1031 exchange to buy a personal residence, it has to be an investment property. If this is the route you take, you have 45 days to find and identify three properties you’re interested in purchasing. You have a total of 180 days to close on your chosen property.
There are other rules and nuances, but that’s why you work with experts to maximize the profit that you are keeping on your investment property. The Hefferman Team is here to help sell your house. We have the experience you need to get the most profit possible. Today’s real estate market is hotter than ever, contact us today!
Hire Real Estate Agents with Experience
It can be tempting to sell your investment property on your own, but the amount you’d save on commissions costs is marginal at best. In addition to that, a real estate agent could get a higher price out of potential buyers.
We also have insider information on:
- Rental trends in the Tampa-Bay Area
- Tax implications of selling your investment property
- Investor networks seeking properties
- Return on Investment
- After repair value (AVR)
Choose Team Heffernan to sell your investment property. We can help you figure out the best strategy to get the most from your investment. Reach out to our team for a comparative market analysis (CMA) today. We’d love to sell your property and get cash in your hands faster.