What do I do when it’s time to sell my investment property?
That’s a great question to ask. Often, we focus mostly on how to find and purchase these properties. We talk about the benefits of holding them over time as investments. But it’s good to think about the end game: how do I get the best price with the least amount of hassle when I’m ready to sell?
Here, I’ll lay out three underlying principles to keep in mind. That way, we won’t get caught up in too many details. These mental tools will serve you well, regardless of whether you’re selling for the first time, or the twentieth…
Know Your Market
This does include bigger trends, like whether the market currently favors buyers or sellers in your area. This matters, not because it will automatically determine your price or anything like that… but because it helps you have realistic expectations. If you want or need to sell, and you know it’s more of a buyer’s market in your area, then you won’t be expecting to pocket the same amount you would if it were a seller’s market.
But there’s more. What you really want to know is how the competition stacks up in your area. And do keep in my mind that you want to focus on your area. Reading general articles like “Housing Stats in America” or “Sellers Beware: The Buyers Are the Real Winners Now” won’t cut it. What’s happening in Washington state doesn’t really tell you much about what’s happening in Tennessee or Oklahoma. So if your property is in Oklahoma, that’s where you’ll find the data you need. Forget “all across the country.”
Of course, make sure you’re comparing apples to apples. If your property is occupied, then look for listings and sold properties that are occupied. The same goes for the age, size, and condition of the properties you’re looking at.
This may sound obvious, but it’s easy to get caught up in your emotions when you see high listings and sale prices. You think, “Great! I can easily get that for my property.” But when you look more closely, you may notice key differences in terms of the location or condition of those properties ‒ you may have to set your expectations a bit lower. The bottom line is, gather data… using your brain, not your emotions.
Don’t Neglect the Obvious Ways to Add Value
You may not be flipping your house, but it’s often the little things that add value to your property. Think fresh paint, lighting fixtures, maybe flooring updates. Landscaping can be a big boost as well.
If you bought a house in good condition to begin with (like I recommend), and tended to these details before renting it out, you’re ahead of the game. You’ll mostly just be taking care of wear and tear and keeping things updated. But even if you didn’t do such a great job of this when you bought the property, now’s a good time to do so, as long as it’s still of fairly recent construction and in decent shape.
Remember, you want to make it as easy as possible for a new investor or family to say Yes to buying this property. By going a few steps beyond “just good enough,” you give them a reason to pay more ‒ and pay now.
Know What You Want Going Into the Deal
If you want to be (and feel) in control of how you sell your property, it’s up to you to make that happen. And a big part of that is getting your head straight about what you want out of the sale before you start negotiating.
Because if you don’t have a plan for how you want the deal to go down… it’s almost certain that the other party does. Knowing your desired outcome, and where you will and will not be flexible, leaves you in control.
So, what does this mean in practice?
You must separate your emotions from your ability to “do the math.” It’s OK to have strong emotions (positive or negative) about selling your property ‒ but don’t let them cloud your judgement.
Know what the lowest offer you’ll take is… and be willing to walk away if they go below it.
Have a clear idea of an attainable number you could get on the high end. By all means, it’s great to get the highest number you can ‒ just make sure you have realistic expectations before you sit down at the table.
Know what your overall goal is for the sale. Is it to get the best deal you can, as quickly as possible? Or is to get the most money you can, regardless of how long it takes? Has the property been a pain to manage, or do you just have bigger fish to fry now?
And so on… As long as you work out answers to these kinds of questions for yourself, you’ll be a market player, not a victim.
Conclusion: Right Principles Make Everything Easier
Look, every deal is unique. And different property types have all sorts of details that go with them in terms of legal requirements, taxes, options for financing, and more. But if you keep these three principles in mind, then you’ll have the tools you need to make sense of any specifics that come up ‒ whether you’re selling a single family residence, an eight-plex, or even a full-blown apartment complex.
In all these scenarios, you’ll have the edge by knowing your market, adding value for the buyer in simple but effective ways, and being clear on exactly what you want out of the deal.
So, when it’s time to sell, do it confidently and well. Then move on to the next deal.
Ready to become an expert at buying and selling real estate as an investment strategy? Give us a call at (801) 990-5109 or schedule your free appointment hereto build a personalized Wealth Plan. You’ll discover why real estate is one of the best investments you can possibly make for your retirement.