Selling invest property is quite a bit different than selling a residential property and comes with its own unique challenges. It may be the final step in your business plan for that particular property, and you’ll want to maximize profits when you sell. The problem, though, is that there are many things that can go wrong along the way. Read on, then, for our top-5 tips for selling your investment property in Chicago.
1. Maximize Attractiveness and Minimize Expenses
Selling your investment property for the best price begins with doing the necessary prep work. Investment buyers will be willing to pay more for a property that promises a higher return or monthly income.
So the first step toward selling your investment property in Chicago involves making improvements that make it more attractive to tenants, “which in turn will allow you to sell your . . . property at a higher overall cost. . . . The sale of [investment property] is highly dependent on your property’s appeal to tenants.”
The next related step is to minimize the expenses related to your property. “[M]minimizing your monthly operating costs will make your . . . property more attractive to potential buyers. To improve positive cash flow, you can take steps such as installing high-grade insulation and modern appliances, which will significantly reduce the operating costs of your property.”
2. Study the Local Market
Studying and understanding the local market is the next step toward selling your investment property in Chicago. You can leverage both the current state of the market and future trends in your marketing efforts.
“Looking into the health of your local rental market will allow you to better understand the value your property has to a real estate investor. In fact, this can be one of your strongest selling points. If you can advertise a strong real estate market, a strong local employment market, and high occupancy rates in your area, real estate investors will be lining up for a chance to capitalize on your rental property’s huge potential.”
In addition, learning about planned construction projects and economic trends in the area will give your further marketing leverage. Buyers will likely jump on a property where things will soon be booming. To find out more about market trends in your area, contact a Chicago agent at (630) 984-0000.
3. Price It Right
Pricing right – that is, competitively and according to what the market will bear – may be the most important aspect of selling your Chicago investment property. Price too high, and you’ll scare buyers away; price too low, and you’ll lose money.
The trick is to price in line with fair market value. The primary tool for determining this value is a comparative market analysis (CMA) –“an analysis of the prices at which similar properties have been sold in the same area in recent months.” Your best bet here is to have your local agent perform a CMA (or “run the comps”) for you.
4. Time It Right and Market Effectively
Timing is always important, and that’s no less the case for selling your investment property. Here’s what industry experts have to say on this matter . . .
“If you’ve owned your . . . property for less than a year, you may want to consider postponing listing. . . By holding onto a property for more than one year, you will avoid short-term capital gains. The money made from that sale, if owned for less than a year, will be tagged onto to your overall income and you’ll be taxed according to whichever tax bracket that places you [in]. . . . Thus knowing when to sell your rental property can make a difference of thousands of dollars.”
And then you have to market effectively, using both old strategies and the newer digital tools to get the widest reach possible. If you’re unsure how to proceed here, your Chicago agent can help you craft an effective marketing plan/strategy. Discover more by calling (630) 984-0000.
5. Don’t Forget Taxes
It also pays the keep taxes in mind when selling your investment property in Chicago. And that’s because the taxes on the sale of an investment property (especially rental property) are higher than those for residential properties.
“[E]everyone considering the sale of a rental property should know about section1030 of the US tax code. Utilizing this tax code effectively allows you to sell your investment property, acquire a similar property, and defer paying capital gains taxes at the time of the exchange. . .. Being knowledgeable of this tax code can help you avoid a loss on the sale of a rental property or a negative return on investment.”
And Hire a Good Chicago Agent
As we mentioned at the outset, selling an investment property comes with its own set of challenges. You can, however, overcome those challenges and come out ahead with a good local agent in your corner. Why wouldn’t you want that advantage? So before selling your investment property in Chicago, be sure to contact us at (630) 984-0000.