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8 Tips for Selling Your Denver County Investment Property

Denver RES  |  May 15, 2023

8 Tips for Selling Your Denver County Investment Property

Even though rental properties are excellent investments, there may be a time when an investment property owner is ready to sell. Maybe the upkeep has become too much, or it's no longer profitable to hold onto the rental property. Depending on who the owner is renting out to and if they employ a property manager, maintaining an investment property can be a lot of work.

This article will cover best practices for selling an investment property, from having tenants renting the property and needing to sell before their lease is up to best practices for getting the most money for the property. Here are eight tips for selling Denver County property.

Selling while tenants still occupy the property

Be mindful of renters

While it may seem obvious, it's crucial to keep in mind that tenants view their rented space as their home even though the owner is the landlord. Therefore, it's necessary to treat tenants and their requirements with respect. Selling the property might displace tenants from their homes, causing them to react negatively to abrupt notices. It's not uncommon for people to feel unhappy about having to move unexpectedly.

Many landlords provide incentives, such as reduced rent or assistance with moving, to encourage renters to move out of a rental property. It’s important for sellers to follow local laws regarding renters’ rights when selling a rental property.

Sell a Denver property directly

Consider working with a reputable buyer who will purchase your property in its present state for a fair price, even if tenants are occupying it. This may not be the best option for every property investor looking to sell, as some may have better luck selling through the MLS. However, other property investors who are potential buyers in Denver will understand the need for a prompt sale at a reasonable price while respecting the tenants. While local, direct sales aren't for everyone, they're an option worth exploring.

Have the financials ready

When selling an investment property, it's common to have a fellow property investor as a potential buyer. These buyers are interested in the property's potential and want to know about its past performance. As the owner, it's important to provide the financials, vacancy rate, and documentation of any maintenance or repairs that have been done on the property. Many potential investors will view an investment property with reliable tenants as advantageous. For this reason, selling a property with tenants can be a positive thing — just make sure to have the necessary paperwork prepared.

Appeal to homebuyers

If a rental property is not generating good returns, potential investors may lose interest and look for other options. When selling Denver County homes, one may have more success selling to individuals who plan to live on the property themselves. This means hiring a real estate agent in Denver and preparing for a longer selling process until a buyer is found.

When an investment property owner first decides to sell, they may want to consider listing on the MLS while also gauging the interest of prospective investment buyers. A diversified approach to selling can serve a seller well. Remember, the tenant’s comfort and ease during such a transition should be a top priority, no matter who the property sells to.

Consider selling to a tenant

One way to begin searching for a buyer as an investment property owner is by considering the current tenants as potential buyers. Since they have lived in the house, they have probably established a sense of comfort there and will feel included in the decision to sell by being asked if they'd like to buy. However, it's important to ensure that your tenants are qualified to buy your house and have enough funds for a down payment and other buying costs before considering a sale.

Considerations when selling investment property

Prepare for tax season

When selling a rental property, homeowners won't receive the same tax breaks as they would if they sold a home that they lived in as their main residence. Since rental properties often increase in value, they will likely make a profit from the sale, known as a capital gain.

If you own an investment property and sell it within a year of owning it, the profit will be taxed at the same rate as your regular income. However, if you sell it after owning it for more than a year, the profit will be taxed at a lower rate since it will be considered a long-term capital gain. Either way, don't expect tax breaks from this sale.

Make necessary repairs

For property owners who want to sell their rental property quickly and don't want to deal with current repairs, they may potentially find a buyer like a fellow property investor. However, if they take the time to address repairs and upgrades before listing, they may attract better and higher-paying buyers.

It's important to note that restoring an empty property can be time-consuming, costly, and result in a loss of rental income, so consider these factors before making a decision.

Additional factors to take into account include whether there are paying tenants present who can accommodate repair work, whether the property must be unoccupied while repairs are ongoing, the state of the real estate market, whether the demand for rentals affects the need for repairs, and tax considerations, such as whether repairs are tax-deductible or viewed as adding value.

Hire an expert realtor

If a holder of Denver County real estate is lucky enough to sell directly to another property investor or interested buyer, that's great. Work with an expert realtor who can help you navigate the selling process, from negotiations to closing. Hiring a realtor is an investment that pays itself back.

Set goals for the sale

The ins and outs of selling Denver County real estate can be complicated, particularly when dealing with investment properties. There are many factors to consider, including taxes, repairs, tenants, and expert help. However, if property owners know what they want to get out of the sale, they can make choices that align with their best interests.

If you're an investment property holder looking to sell Denver County property, contact Silvana Smith today to learn more about what makes a successful sale.

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