If you’ve thought about selling your investment property during this seller’s market, you’re not alone. Or, we don’t blame you. Over the last year and two, you’ve likely seen a lot of owners make some good money on their properties by selling for a lot more than their homes might actually be worth.
When you decide to hold onto your investment during a seller’s market, you’re actually earning more than those fellow investors who are unloading whatever they can.
Your property is gaining value, your tenants are paying down your mortgage, and rents are going up.
Here are some of the ways you can make the most of your investment in a seller’s market.
Make Some Improvements to Your Charleston Investment
Rents are going up, and that’s a good thing for you when you decide to hold your investment property and continue renting it out.
It also means you’re earning more income. Help yourself increase your property value and your rental value by making some minor and cost-effective improvements and updates.
Why would you do this now, when rents are going up anyway and maintenance is so expensive?
Because improvements, minor renovations, and even cosmetic updates will allow you to earn even more money. Well-qualified renters will be fighting to rent your home.
And, when you do decide to sell years from now, you’ll have a more valuable property to take to the sales market.
Maximize Your Rent
Rents are going up, and you need to make sure you’re charging a price that’s consistent with the rental market.
This includes rental increases when you’re negotiating lease agreements. Retaining good tenants is important, but with the market as squeezed as it is right now, your tenants are likely looking for good reasons to stay.
So, raise the rent almost to the market average. Leave some wiggle room so your tenants can see that they’re getting a good deal. They know what it costs to move. They understand that rents are up elsewhere. Don’t be afraid to ask for more in monthly rent. Provide the comparative rental prices and the data you’ve gathered if they push back.
Take All Your Tax Benefits
Your property value has likely increased with the market performing the way it has, and that’s going to mean that your taxes will likely go up too. You’ll also need to report the rent you earn on your federal income tax.
How can you limit your tax liability?
There are several ways to keep your taxes lower when you own rental property. You can deduct:
- Mortgage interest
- Professional service costs, like property management
- Property taxes
- Maintenance costs
You can also think about conducting a 1031 exchange if you want to sell one of your investment properties in this market but you don’t want to pay the capital gains taxes. Simply find another property, put the proceeds from the sale into that home, and defer those taxes.
We can help you leverage what you own in the market right now and in the future. For some reliable investment advice, please contact us at Charleston Home Rentals.