People get into real estate investment to maximize their profits and expand their portfolios. So, naturally, part of investing is selling your properties to earn capital gains. However, suppose you’re new to investing and need some guidance on selling your property. In that case, there are some things to consider before you sell. IPRG answers all of your questions and offers advice on selling your investment property throughout the entire selling process.
Investment Property Sellers Guide
If you’re investing in real estate, you probably own one or more multifamily rental properties. If that is the case, you most likely have tenants to think about when selling your property. So, how do you sell when you have tenants? There are a few options you could go with.
The first option is to wait until the lease expires on the building. This way, you have time to let your tenants know you are selling and not renewing leases. Then the building can be empty, allowing you to make any fixes or updates before showing it to potential buyers. On the other hand, you could sell the building to a tenant. If you have any tenants interested in becoming investors themselves, it would be a win-win to sell the building to them.
Another option you could look into is paying your tenants to leave the building if you’re looking to sell without any current tenants in the building. Or the final option, you could sell the building with the tenants still living there. Selecting which option is best for your investment is your personal preference. It essentially comes down to your goals as an investor. How to sell your property with tenants is probably not the only question you’ll have when encountering the selling process. Don’t worry; we’ve answered the most obvious questions for you in our sellers FAQs.
Why Should I Sell My Investment Property?
Maximizing your ROI on your investment is the primary goal of becoming an investor in real estate. Of course, selling your property helps get you there, but there are several reasons why you should sell your investment property.
Relocation is one of them. Selling your property allows you to gain the funds needed to relocate or change where you invest in expanding your portfolio. Another reason to sell is to cash in on the appreciation of the property. Instead of renting it out, investors may want to reap the rewards if they’ve seen a good return, sell and take the money appreciated on the property.
While most investors see a good return on their investment property, another reason to sell is if they encounter a loss through maintenance and upkeep on the property instead of gains. Finally, stress is another reason you may consider selling, especially if you have a loss.
When I Sell My Property, Will I Incur Taxes?
Yes, taxes are inevitable when it comes to selling and buying property. Any profit made from an investment property sale is taxable. These capital gain tax rates vary depending on how long you’ve had the property in your portfolio. On top of capital gain taxes, there are depreciation recapture taxes you may be facing if you wrote off depreciation while owning the property. While these taxes are inevitable, they are also avoidable.
How Do I Offset Taxes?
You can lessen the blow of taxes by offsetting them with the go-to method investors prefer of swapping your property through a 1031 Exchange. This allows you to defer capital gain taxes by trading your current property for a new one. Still, it must be done within 45 days to find a new property and 180 days to close on that property.
How Do I Sell My Property?
Like selling any property, there are steps to take with your investment. First, as we mentioned above, if you have tenants in the building, notify them verbally and in writing that you are selling. Then communicate if they will be able to remain there after the building is sold or need to relocate. Either way, you’ll want to have your tenants vacate when you need to make any fixes or updates and have the property listed for potential showings.
Once you’re ready to list your property, you’ll want to enlist a knowledgeable investment firm to represent you like IPRG. Working with an investment company will help get your property sold faster by pricing it accordingly and at the best deal for your investment.
If you’re still looking for more information on selling your investment property, contact IPRG. Our expert brokers have all the answers to selling and buying investment properties. We will walk you through the process and get your property sold at the best price to maximize your ROI.