Have you decided to sell your investment property?
If so, you likely have your reasons. Maybe you’re planning to re-invest the proceeds into a 1031 exchange. Perhaps you’re tired of the growing maintenance costs or the investment simply doesn’t work for your portfolio any longer.
There are some excellent reasons to sell your Charleston investment property.
If you’re still on the fence, however, or you’re wondering whether now is the right time, we have some things for you to consider before you decide to sell.
Compare the Charleston Rental Market to the Sales Market
Selling a home will still bring you a nice profit. Prices have likely reached their peak, but they’re not dropping too quickly. You may not have buyers outbidding each other like a year or two ago, but you should feel comfortable getting your asking price.
However, things are shifting, especially as mortgage rates rise. Unless you’re selling to another investor who happens to be paying in cash, your buyer will be taking a more expensive loan. That may impact your price negotiations. Buyers are still interested, but the sense of urgency that blanketed the market earlier this year has waned a bit.
The rental market in Charleston, however, remains strong and competitive for tenants. If you’re renting out a property here, you’re enjoying higher rental values, low vacancy rates, and a large pool of well-qualified tenants. It’s actually a great time to be renting out a property, so make sure you’ll get what you need before you give that up and sell your property.
Consider the Tax Implications of Selling a Charleston Investment Property
We are probably pretty safe in guessing that the value of your investment property is much higher now than it was when you bought it. You’ll earn a nice profit when you sell.
Profit is good, but it’s also taxable. Have you considered the tax exposure you’ll face by selling your property?
If you’re worried about what you’ll have to pay, consider a 1031 exchange. You can still sell the property you no longer want, and instead of pocketing the proceeds, you can re-invest them into another rental property. This might be the best way to both sell your property and remain in the rental market. You’ll also defer your capital gains taxes.
Prepare to Work with Your Tenants
Is your investment property occupied?
If so, you’ll have to think about how you’ll handle the sale with your tenants. You can wait until their lease is over and then not renew the agreement. It’s important that you provide them with plenty of notice if you’re going to list the home on the sales market at the end of the lease term.
There may be an opportunity here. Would your tenants like to buy the home? Always make that offer when you’re looking for ways to unload an occupied rental home.
If the tenants are early in their lease agreement or still have several months left to the lease term, you’ll have to negotiate with those tenants and with any potential buyers about what will happen to that tenancy. This can be tricky, and it may cost you money.
There’s a lot to think about. If you want to sell your investment property, contact us at Charleston Home Rentals. We can walk you through your options and help you navigate the process.