Deciding to sell
As part of setting your property investment goals, you should have a plan for if and when you will sell the property. It shouldn’t be an emotional decision to make, but rather the next step of your investment plan.
The catch can be if at some stage you have lived in the property prior to renting it out. Always try to keep emotions out of the process and make your decision based on market conditions and your investment goals.
Tenanted or not?
There are lots of stories about whether it is a wise move to sell your investment property with a tenant in place. Ultimately, the decision should be based on the quality of your tenant. The pros of such a move include:
- It can be more attractive to other investor buyers
- It demonstrates attractiveness of the property to tenants
- It gives proof of potential rental income
While the cons can look something like this:
- Poor tenants may dissuade investor buyers
- Tenants may not keep the property presentable for inspection
- Tenants can restrict access to potential purchasers
Be prepared though that the decision may be made for you – most tenants don’t like the risk of waiting to see whether the purchasers will want them out, and so may vacate the property before it is sold. You can avoid this by giving your tenants the required notice of your intent to sell and cooperating with them during the process. If they are assured of their rights as a tenant, they may wish to stay.
Maximising your returns
Don’t be in a rush to offload your investment property – it would be a shame to build great capital only to lose some of that at the finish line from poor planning. So before putting your property to market, be sure to cover these points first:
- Determine whether you are making a capital gain or loss
- Calculate the amount of capital gains tax (CGT) you will have to pay
- Determine which agent you will sell with. If the property has been managed by an agency, press them for a discounted rate to undertake the sale
- As with any property, get multiple market appraisals to ensure your price expectations reflect the current market
- Will you have to pay your lender a mortgage exit fee?
- Consider whether a refresh of the propertyprior to putting it on the market will boost the sale price
Unlike selling the family home, the sale of an investment property is strictly a business transaction. As such, always ensure the numbers stack up to justify selling the property and maintain a contingency plan should a sale not eventuate.
Article Extract From: http://www.domain.com.au/advice/putting-your-investment-up-for-sale/
Authur: Adam Zuchetti