Pro Tips for Selling Your Investment Properties

Selling an investment property is different from selling a primary residence. In many cases, when you put an investment property on the market, your prospective buyers will be other investors, who generally have different criteria for evaluating a property than buyers purchasing a home for their own use.

The strategies that work when selling to non-investors could actually work against you when dealing with investors. For instance, many non-investors expect you to renovate the home or repaint it in trending colors. Conversely, investors do not want updates that raise the maintenance cost of the house— or home additions that increase the sales price of the home but do not boost potential rental income.

Other buyers may consider a home’s current value and the possibility of making a profit in the future. Investors prioritize the home’s current value, its maintenance cost, and the possibility of earning income right away. The marketing approach you use when selling an investment property should take these essential differences into account.

What are the best sales strategies for selling an investment property?

Know your local housing market.  A primary concern for investors is the state of the rental market in the location. Buyers want to know that they will have no problem finding quality tenants for the home. They are interested in the vacancy rates for the type of home you are selling as well as upcoming projects in the area that could impact future demand for rental homes. It is crucial to include this type of information in your marketing materials and to show the relative absence of adverse factors like crime.

Decide your listing price wisely.  When selling any property, you may have to choose between selling at the highest price or in the shortest time frame. Achieving both is often not possible. When trying to sell an investment property, it is usually better to try to sell fast, given that your operating costs may continue past the point when rental income stops. This could mean listing the property slightly lower than its market value.

Keep your operational costs low.  A rental property with minimal operational costs will allow its owner to maximize rental income, will give the owner more flexibility on the time frame for selling the property, and will be attractive to other investors as potential buyers. Ideally, you should not be spending more than 1½ to 2 times the monthly rental income on annual maintenance. If the cost of operating the asset is higher than this, it might be a good idea to try to reduce operating costs before putting the property on the market.

Show buyers your rental income.  No matter how nicely you represent the rental market in the property location, nothing beats proof via actual records of your rental income. By showing prospective buyers that you are actually earning profit on the rental, you give buyers a more compelling reason to buy the property. The information should include the rent roll, rental growth rate, expense sheet, and any other details to demonstrate the potential profit of the investment for prospective buyers.  Similarly, providing information on the property itself, such as renovation records and the maintenance and repair history, can help prospective buyers decide on a property and indicate that you aim to be honest and transparent in the sales process.

Stage the property.  Some property managers downplay the need to stage an investment property since the prospective buyer is not the end-user of the property. The actual user of the home will be the person who will eventually rent it. However, investors still want to know if tenants will find the home appealing, so staging a home to look and feel more “homey” will help answer this question convincingly.  Photos of the staged home may also make it easier for the future landlord to rent the property after they close on the deal.

Create a great ad copy.  Finally, find someone to write high-quality ad copy for the property. Property investors are frequently selling homes or advertising for renters, so they are used to making initial judgments based on ads. To gain their attention, you need an ad copy that stands out. Find a professional copywriter who can write an advertisement that grabs attention.

Recognizing the distinct issues for selling an investment property (or selling a primary residence to potential investors) can help you maximize profit on the sale and hopefully sell the property in a short timeframe.  Anticipating and addressing investors’ concerns in a forthright manner is key to this process, along with presenting the property—and the local market—in the most favorable light.

This guest blog article was written by Schambs Property Management, based in Cary, NC.