Putting up a “for sale” sign on your commercial property can be tough. But with the effects of COVID-19, many industries are affected including commercial real estate properties. The Covid-19 pandemic may have initially disrupted the real estate industry but it’s now showing signs of a speedy recovery, thanks to its resilience. However, industry leaders are worried about the aftermath and are looking for solutions.
If you are a property owner intent on selling rental property during COVID, take note of these important considerations.
What To Consider Before Selling a Property During the Pandemic
Take note of sales prices
There is a blend of low-interest rates and low inventory because of the Covid-19 pandemic. As a result, you now have a red-hot housing market and plenty of homes are mostly sold above the asking price. But that should not be your sole focus. But before deciding to sell your property, you will still need to spend money for your new home. And you will not be the only buyer out there because a lot of people will want to take advantage of the latest trend. You may end up paying top dollar for a new home. And if you decide to rent a property, you also have to deal with the skyrocketing cost of rent despite the pandemic.
But if you want to take advantage of this hot real estate market, sell your property and be smart by picking a less expensive area for your new property or investment.
Take advantage of good photography
There are rental properties that look better in person but because of poor quality photos, they lose their appeal. Online showings are now the common trend and buyers are only physically visiting properties that they are serious about. The coronavirus pandemic has added more demand for online content and buyers have also adopted this house-hunting method. If your property has a lot of architectural details that don’t appear on camera, it might be time to get an exceptional photographer or upgrade your marketing strategies so you can highlight the important aspect of your home.
Do not rely on your emotions.
If you are selling your property due to an emotional fallout because of the struggles caused by the pandemic. Some investors prefer waiting but it depends on a lot of factors and reasons why you are selling rental property during COVID. If you think that the property is underperforming, it’s time to evaluate and ask yourself if this is still worth the time and effort. Perhaps, if you look at how much your property is earning, you may realize that your other investments that generate passive income can sustain your financial needs.
Give it some time before selling rental property and move on to a fresh start. Think it through to determine whether now is the best time to sell your rental property.
Check the health status
When you sell the property during the pandemic means exposing your home to health risks. When you invite potential buyers into your home, you will never know the health status of the people viewing the property. During the pandemic, home tours are done mostly online but eventually, buyers will want to have a physical visit. Make sure that you are comfortable having people around and have protocols in place when selling rental property during COVID.
Finding help can be tough
It can be challenging to find people to help you prep the property and other providers. Usually, you need cleaners and home staging experts to ensure that your home is presentable and appealing to potential buyers. But if you are intent on selling the property during the pandemic, careful planning is a smart move. Decide how much you can do yourself and check if your friends or family can help you out.
Consider existing tenants
When selling your rental property during the pandemic, you also have to consider the tenants that are currently living in your property. Discuss any concerns you may have with your tenants especially when you are expecting potential buyers for a visit. They should be aware of what safety protocols you have in place to reduce any risks during the visit. They should also be aware of how you have adapted your practices by the health guidelines. They should be notified during property showing and their preferences.
Should You Sell Your Rental Property?
The recent pandemic has brought about certain changes in various industries and for some reason, you are also planning to sell your rental property. Whatever your reasons for selling, checking out these factors is important to help you make the best decision.
Review your asset allocation. It is unwise to put your eggs in one investment basket. Keep in mind that when the market goes up, your returns can go higher but if the market declines, that’s when most investors consider selling rental property below market value. Smart investors usually advise newbies to keep a smaller percentage of their investment and allocate them somewhere else.
Check your plans.
Are you planning to have a major change in your lifestyle? Do you plan to save up for your retirement or to travel and spend months in a different country? You should also consider who will manage your property if you plan to be away.
Check your lifestyle goals.
Determine the reasons why being a landlord doesn’t interest you anymore. You should also check if you are truly making annual money from this investment or if it is worth selling. Check if the payoff is still worth the time you invest in managing your rental property and if you were able to achieve your target ROI on this investment. Itemize everything you need for your retirement to give you an idea if your rental property is truly worth keeping or you are better off without the fuss.
Where do you plan to invest your proceeds?
The market starts to settle down after the initial struggle of the pandemic. Weigh your options before deciding if you should sell your rental property. The rental rates continue to rise, promising higher returns and while the market is not, it might be wise to make the most of it and keep generating passive income. However, if selling your property seems the next best move for you, you can also get a good price if you decide to sell now.
Once you sell your property, taxes will be deducted from your capital gain and recapture. Whatever gains you have on your property is taxable as part of the capital tax gains. If you sell your property at a time when the market is hot and your income is high, you will also have higher taxes and vice versa. For your convenience, use a reliable selling rental property tax calculator to help you out.
Whatever industry you are in, change is always inevitable. If you have reached the point in your life when you just want to let go of your old investment properties and invest in promising ones, it’s always better to talk to professionals.
Take a look at the real estate trends to help you decide before selling rental property in California. As a smart investor, be prepared for your exit strategy if you decide to sell.
You can also check our blog to help you weigh the pros and cons and invest your hard-earned money in worthwhile investments.