Whatever the reason you may have for listing an investment property, there are certain factors that you need to consider that you wouldn’t necessarily have to worry about when selling a typical primary residence. How you proceed with the transaction could have an impact on your bottom line, which is why it’s important that the listing is done with some careful consideration.
How Will You Sell the Property?
If your investment property is currently vacant, it will be a lot easier to deal with showings. There’s also no need to have to rely on a tenant to ensure that the property is kept neat and tidy and ready to be shown to prospective buyers. Having said that, you should consider having the property staged in such a way that it attracts the right buyers in the area, especially if the place is completely empty.
If you have a tenant living in the property, showing the place might be a little more challenging, but it doesn’t have to be difficult. There are two ways to go about this situation: either wait until the lease expires and the tenant moves out, or start showing it while the tenant is still living there.
As far as waiting until the lease expires is concerned, you’ll have the advantage of not having to work around your tenant and keeping your fingers crossed that the property is kept in tip-top shape during showings. However, you’ll be without any rental investment coming in until you find a buyer and the deal closes. In addition, waiting could put a hold on your investments.
If you list your property while the tenant is still living there, you’ll be able to attract investors who don’t want the hassle of having to look for a tenant right away. The downside to this, however, is that your current tenant might not cooperate with you to keep the place in decent condition and make access for showings easy.
How Will You Target the Right Buyer?
Listing an investment property isn’t exactly like listing a regular residential home. The target audience differs between the two, obviously. On the one hand, you’ll be targeting those who are looking for a place to live and raise their families; on the other hand, you’ll be targeting investors who are looking for a place that will bring them sizeable returns. As such, you’ll have to market the property accordingly. Determine the best way to attract as many prospective buyers as possible to target the right buyer and get the best offer.
Consider the Tax Implications when Listing an Investment Property
When you sell property that’s been used for investment purposes and is not your primary residence, you’ll be stuck paying capital gains. Capital gains refers to the profit that you make upon the sale of an investment property. You will need to factor in the cost associated with paying taxes on the profit you make when you sell.
Currently, only 50% of capital gains are taxable at an individual’s tax rate. That means if you make a profit of $100,000 on the sale of an investment property, for instance, you will only be taxed on $50,000 at your tax rate. Your accountant or bookkeeper will be able to help you figure out your tax liability so that you are aware of the tax implications of the sale before you go through with the transaction.
The Bottom Line
If you are thinking of selling your investment property, it’s important to weigh all the pros and cons first, then consider how you will approach the listing process. Be sure to work with a trusted real estate professional who is well versed in the realm of buying and selling investment properties to ensure that yours is marketed properly and attracts a solid offer sooner than later.