How to Make The Most Out of Selling Your Investment Property
So now you are ready to SELL your investment.
How should it be positioned to command the highest price? Is it equally important to sell it fast? Should you employ a professional real estate agent? Any renovations needed?
A few tried and true factors may be in your favor:
A sale to an owner occupant typically commands a higher price than a sale to an investor.
- Owner occupants may even pay premiums if there are building attributes and functionalities that appeal to their social, business, and spatial needs.
When prospective buyers tour properties, favorable site, and smell attributes can enhance demand.
- Dead or dying landscape, musty odors, and stains on paint and carpets can easily deter buyers. Cosmetic upgrades are typically low-cost repairs and curing deferred maintenance (postponed repair items that are needed) can help if investors look to sell properties at price premiums. Nothing beats the smell of FRESH BAKED COOKIES!
Remaining lease term is a major factor in determining pricing.
- A 10-year remaining lease term demands a price premium over a 9-year term. A 5-year remaining lease term demands a price premium over a 4-year term. But little pricing changes occur for a 10 year versus an 11-year term or a 5 year versus a 6-year term. That is because commercial lending terms typically have 20 to 25-year amortization terms, but the loan balance is due in the 5th or 10th year. A lease structure mimicking or exceeding the 5 to 10-year “call” provides additional lender security. An investor may want to restructure the lease term with the tenant prior to a sale.
Keep it Clean.
- Unwanted clutter is a potential sign of mismanagement
Maximize marketing efforts.
- Relying only on the local multiple listing service (MLS) may not showcase your property to all prospective buyers. Online advertising through Trulia, Craigslist, and other websites is important to maximize exposure to buyers. Building a website just to market your asset could be as low as $10. Email flyers to your friends and have them resend the flyer out to their friends can get you needed exposure.
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