Investment properties are valuable assets to anyone’s investment portfolio. Expanding your portfolio often means selling off some of your assets to be able to use the funds toward new, more profitable ones. The process of selling your investment property can often be complex and cause an undesirable result if conducted improperly. To avoid losing out on your investment gains, it is crucial that you have a well-articulated and thought-out plan for selling your property. By following the checklist that we have created, you will be able to avoid many of the pitfalls of selling your investment property, and instead, properly prepare your investment property for sale.
Create a Plan for Your Investment Property
Creating a plan means considering all of the possibilities and eventualities that are common in the selling process. Having a well-thought-out plan will help you prepare and organize your resources so that you are not caught off guard should a complication arise. Throughout your preparations, it is highly important to consider the cost of your efforts against the gains that they will make. You will want to ensure that any expense that goes into improving your property will cause its value to increase more than the initial expenditure. Once you have the financial aspect worked out, you will want a plan of action for preparing the physical appearance of your property inside and out. The visual appeal of a property can go a long way in increasing the potential sales price of your property. Finally, you will want to talk to a professional real estate agent to plan your selling goals and to find out your property’s market value.
Hiring a Real Estate Agent
By hiring a real estate agent, you gain the advantage of having a professional opinion assist in guiding you through market complexities. Firms such as Ben Frederick Realty specialize in selling investment properties, and due to this experience, can provide unique insights into how to maximize your sale price. They will benefit the entire sales process by providing insight into the local housing market, marketing your listing, negotiating, and finding an appropriate price to list your investment property for. Real estate agents make the entire process of selling your property streamlined, quick, and easy. Taking on this by yourself is possible but not recommended.
Declutter and Clean the Interior
The last thing a potential buyer wants to see when they first enter your investment property is an abundance of clutter. By the time your property is shown, you are going to want to declutter the interior of the home as much as possible. This means removing any personal items and any excess items. You will want to provide as much open space as possible so that they can imagine their own layout without the obstruction of clutter. Once you have removed as much as possible, you will want to thoroughly clean the entire interior. This means dusting surfaces, vacuuming carpets, and scrubbing the kitchen and bathroom countertops and floors. Going the extra mile in this step usually only costs a few dollars for cleaning supplies but will make a major difference in how prospective buyers view your property.
Investment Property Maintenance
If you have delayed performing maintenance on your investment property, you will want to have it handled before you begin showing your property. Check on the home’s integral systems such as HVAC, plumbing, and water heater. If any of the previously mentioned systems are in need of repair, do so, as it will play a major role in deciding your property’s value. You will also want to ensure that the home itself is in good condition.
Once you have decluttered and deeply cleaned the interior of your property, it is time to begin working on making the exterior more visually appealing. This can also be something that you do on your own to save money or hire a professional to ensure that the job is done correctly. Start with mowing your lawn, and cleaning your gutters, and then move on to your landscaping. Removing old plant life, trimming bushes and a fresh layer of mulch can go a long way in boosting the curb appeal of your home. Power-washing driveways and walkways will also make your home look fresh without breaking the bank. Curb appeal is crucial for two main reasons. The first is attracting potential buyers and the second is increasing the appraised value of your property. Making these improvements add up and will greatly increase the sale price of your home.
Consider Taxes on Capital Gains
Unfortunately, the capital gains tax for rental properties is much higher than the sale of a personal-use home. Capital gains tax is the tax fee that you are legally required to pay on the profit from the sale of your property and is increased by any depreciation that you have previously claimed against the property. If you have previously used a loss against your property against your tax bill, your tax fee will be larger after the sale process. If you decide that you want to reinvest your capital gains into another similar property, Internal Revenue Code Section 1031 allows you to avoid taxes on your profit by reinvesting your gains into a same-type property. Don’t let the capital gains tax surprise you, instead, hire a lawyer or a tax advisor that will proficiently guide you through the financial aspect of selling your investment property.
When you have reached the closing documents step, you will want to remain organized and ensure that you have all of the necessary documents required for closing. This includes your seller disclosures, addendums, closing statement, purchase contract, and home inspections. Having all of these documents on hand is very important for facilitating a smooth closing procedure. Having an experienced real estate agent will also help towards ensuring that you have all of the necessary documents and that you don’t miss any of the important steps to closing on your home sale.
Cancel Policies and Utilities
To avoid paying for the new owners’ utilities and other home-ownership-related policies, you will want to cancel all of them prior to finalizing the sale. This includes gas, electricity, phone lines, internet, water, and any other expense that is attached to your investment property.
Listing and Sale
Once you have fully prepared yourself and your investment property for sale, you are ready to make your listing. Having a real estate agent handle this aspect makes the entire process much easier and beneficial to you as the seller. Real estate agents have knowledge of the local market and will assist in bringing in a wider variety of potential buyers as well as knowing what price would be appropriate for the property.
Investment Property Help From Maryland’s Realty Experts
If you already own investment properties or are looking to expand your investment portfolio, Ben Frederick Realty is here to help. With decades of experience in Baltimore realty, the team at Ben Frederick possesses a wealth of knowledge that can greatly benefit you and your investments. If you are ready to give your portfolio a professional helping hand, call or contact Ben Frederick Realty today or visit our website to see investment properties currently available in the greater Baltimore area.