Most real estate investors understand the value of buying and holding, but you can’t hold forever. There comes a time when you’re ready to sell an asset and move on to pursue something else. If you know the market and you have a strict set of investment goals that drive all of your decisions and strategies, you will eventually find yourself at the point where you want to sell your Hampton Roads rental property. This will allow you to capitalize on all those returns and all that equity you’ve been building over the life of the investment.
Exit strategies need to be part of your planning process.
You are doing yourself a disservice and missing out on some potential opportunities by not planning your exit early enough. Your exit strategy should be part of your investment goals. You’ll need to know what you want to do and how you want to do it once you’ve achieved what you set out to accomplish.
When you are ready to sell your Hampton Roads investment property, you want to make sure you’re earning as much on it as you possibly can. We’re here to help you do that.
First: Review Those Investment Goals and Expectations
Before you put your Hampton Roads rental property on the market, it's essential to revisit your investment goals and establish some expectations for what you’ll earn on your property and how its sale will affect your portfolio. Your goals could be to liquidate the asset, realize an appreciation in value, or reinvest your proceeds in another investment property.
Understanding those goals and expectations will help you make informed decisions and optimize your proceeds from the sale.
Partner With Real Estate Professionals
Selling a rental property in Hampton Roads requires a deep knowledge of the local market, an understanding of how to market your property so it can easily attract attention and stand out among the competing properties. You’ll need to access the data that real estate experts have so you can understand different pricing strategies.
Working with a local real estate professional is essential in a market like this one. A good agent can help you navigate the complexities of selling your property. When you want to earn top dollar, the choice you make in your real estate partner will matter a lot. Here’s how your agent will help you make a profitable sale:
By recommending a high listing price and offering advice on how to negotiate and manage offers that may come in below that asking price.
By scheduling open houses and showings that are designed to create a sense of competition among potential buyers, increasing the urgency with which they feel they need to make an offer.
By using a network of professional designers, inspectors, and vendors who will partner with you during every part of the sales process.
And, by understanding the requirements to close, and helping you navigate the process of finalizing the deal.
You might have heard stories about bad real estate agents who have left sellers frustrated, confused, and stressed. That’s not the path you want to take. If you’re selling with a tenant still occupying your rental property, there will need to be specific plans made, and you’ll want to involve your Hampton Roads property manager.
Consider Tax Implications When Selling a Hampton Roads Investment
Before you sell, make sure you’re clear about what it will mean for your tax exposure.
Selling your Hampton Roads rental property is likely to have tax implications, especially if you’re making a lot of money on this sale. You’ll have to expect capital gains taxes, depreciation recapture, and state taxes. It's essential to consult with a tax professional who understands real estate investing and can advise you on the best tax strategies to minimize your tax liabilities and maximize your proceeds from the sale.
One way to avoid paying taxes right now on the sale of your property is to exchange it for another one.
When you do a 1031 exchange, you’re still selling the rental property that is no longer working for you. Instead of walking away with cash from the profits, you would re-invest those earnings into another property or properties. This allows you to defer those capital gains taxes, and it allows you to diversify or grow your investment portfolio even while selling an asset.
This would be a twist on your exit strategy that has you exiting from a specific property, but not the benefits that come with investing. It’s something to think about.
Setting the Right Asking Price
As you prepare to sell, remember that your asking price can immediately make or break your home sale.
Here’s something important to remember: the asking price is only what you’re offering the home for on the market. It’s unlikely that you’ll get that asking price. In a strong sales market, you could potentially be entertaining offers that are over the asking price. In a tight market, you’ll have to prepare to consider offers that are lower than what you want.
When it comes to establishing a smart starting point, let us know and we will make sure our in-house Sales Agent gets in touch with you. He will be able to educate you on the market, too, so you know what homes similar to yours are selling for and how long it’s taking them to sell. Our in-house Sales Agent will conduct a comparative analysis that brings you some reliable statistics and hard data that supports how your home will be priced.
Ideally, you’ll be entertaining multiple offers and engaging in negotiations that include counter offers and flexibility around the terms of the sale. This is why you need to know the market; so you can know how much leverage you have and where your greatest strengths happen to be. You’ll rely on your agent, but when you know your property and how it fits into the market, you’ll be able to stay in control of your exit strategy and earn what you’re expecting on your sale. Set an asking price that buyers will notice, and prepare to negotiate when the offers come in.
Does Advertising Impact What You Earn on a Hampton Roads Home Sale?
Yes.
The way your home is marketed and advertised will impact how much you earn and how quickly you sell. It’s pretty much impossible to sell a home that no one knows is available.
Listen to the advice of your agent when it’s time to market your home and look for buyers. Your agent will be well-connected to other agents who are representing buyers. They’ll also have relationships with brokers, investors, and many other community resources.
To maximize your exposure, you should expect to see your listing on the MLS, and it also needs to be syndicated across real estate websites like Zillow and Trulia.
Selling a home starts with a great listing. Make sure your agent focuses on impressive photos and videos, detailed descriptions, and a comprehensive strategy that includes social media shares.
The marketing process will revolve around showings. These will be scheduled by your agent, and it’s usually best for you not to be home when potential buyers are coming to see the property. There will also be open houses and special broker and buyer events.
Selling an Occupied Hampton Roads Rental Home
Selling an investment property while a tenant is in place is not impossible, but it does come with challenges. When you’re selling to another investor who appreciates that there’s already a tenant in place, you’re actually in a very strong position, especially if it’s a good tenant and your rental value is where it should be. You’ll be able to negotiate a higher selling price since you’re offering a property that comes with immediate income.
But, it’s not always so simple.
Trying to sell with a tenant still in place will actually be more frustrating to manage and it could also end up costing you money. It’s also inconvenient. Getting your home listed as soon as you decide you want to sell it is understandable. However, selling an investment property while it’s occupied can sometimes be a mistake if you’re not managing the process wisely. Here’s why:
Staging is impossible. You’re showing a property that’s full of a tenant’s personal belongings. The property could be messy. It could be cluttered. There could be pets. When your home doesn’t show, it’s hard to get top dollar.
Scheduling can be complicated. You’ll have to coordinate when you have people and their agents seeing the home with the tenants who currently live in the home. On a good day, this is merely challenging. On a bad day, it’s a complete nightmare.
You might not be selling to another investor. Suppose you have potential buyers interested in your property as a home they’re planning to occupy? What will you do with your tenants? Relocation fees can be costly.
Selling an occupied investment property is certainly possible. However, prepare for it, and work closely with your Hampton Roads property manager.
Let’s sell your investment property for top dollar. Contact us at Doud Realty Services, Inc. We provide expert property management in Norfolk, Portsmouth, Hampton Roads, as well as surrounding areas such as Virginia Beach, Suffolk, Chesapeake, and Newport News.