Perhaps your circumstances have changed and need access to capital, or you’re just looking to invest elsewhere. Whatever the reason for selling your investment property, there are ways to make the most of your sale.
Let’s look at how to make the most of your sale.
Dominique Grubisa, the founder of DG Institute, which helps Australians “grow wealth through property education”, says property investors should think carefully about the timing of any sale.
She says it’s usually wise to hang onto an investment property for more than 12 months, so you get a 50% discount on capital gains tax when you sell.
Capital gains tax is applied in the financial year you sign the contract, so if you’re thinking of selling in, say, June 2019, waiting a few weeks until July means you don’t pay until 2021.
“Also consider land tax, which is measured on December 31 each year. It’s adjusted pro rata, but if you sell before December, it’s not relevant.”
Knowing what the property might fetch is obviously key, but it’s important to take the emotion out of this aspect as much as possible, Grubisa says.
To get the most realistic picture, consult lots of resources both online and in real-life, she says. For example:
Next, choose either private sale or auction. Both methods have their pros and cons and Grubisa says you need to choose the best option for your circumstances and location.
She says auctions can be great if you’re under time pressure or you’re in a strong market, but it can be stressful if your property is passed in. Your agent will also be pressing you for your absolute lowest price.
It also matters where the property is. “In Perth, for example, auctions are quite rare and buyers would not be comfortable as their cousins in Sydney and Melbourne, where auctions are common,” Grubisa says.
Private sales can give you the time to test the market fully, but be wary of waiting too long for better offers to come rolling in. Grubisa says initial offers are often the market telling you what the property is really worth.
Research local agents and their sale records. See if they’ve sold similar properties to yours and for how much, and how long it took them.
If they have similar properties on their books, you might benefit from the potential buyers who lost out on other properties.
If your target buyer is an investor, make sure the property has tenants so you’re selling it as a going concern.
If it’s an owner/occupier, moving the tenants out before inspections can be a good option, so that potential buyers can have an uninterrupted view of the property.
Grubisa also says some tenants can be less than accommodating to a sale and make potential buyers uncomfortable during inspections.
Try and work with your tenants and give them plenty of notice that you intend to sell. They might just get a deposit together themselves so they can make the property their home.