Mistakes are easy to make when you’re selling a Tampa investment property, even if you’ve done this before. At Hoffman Realty, we’ve been helping investors buy and sell rental properties for years in the Tampa market, and we’ve learned that there are four common mistakes that many people make. We’re talking about them today in the hope that you’ll be more aware of them – and more likely to avoid them.
Mistake #1: Selling for the Wrong Reasons
You might think your investment isn’t a good one just because it isn’t earning cash flow right away or because you feel like you’re losing money every month, even with rent coming in. Don’t sell just because the rent isn’t covering all of your mortgage and other expenses right now. Rental properties are long-term investments, and in the first few months or even years, you’re likely to lose money.
But, are you really losing money? Not when you consider these important factors:
- There is price appreciation. Tampa properties are increasing in value every year, which means the longer you hold onto your property, the more it will be worth when you do sell it. Real estate in this market doubles in value every 10 years. That more than makes up for the $100 or $200 you may be losing right now.
- Your tenant is paying down the principal on your mortgage. Your own equity is going up, and after 10 or 20 years, you could potentially pay off the entire investment.
- There’s also rental appreciation to consider. Rents will likely double every 20 years. Think about what that means. If you hold onto this property and you’re earning twice as much in rent every month while your home’s value has more than doubled – you’re earning a lot of money.
There are also the tax benefits to consider with rental property. Don’t sell because you think you’re losing money. You probably aren’t.
Mistake #2: Trying to Sell While a Tenant is in Place
Occupied properties do not show well. They don’t sell well, either. Your real estate agent will struggle to schedule showings around the tenant, and you also run the risk of showing a messy place. If you’re going to sell, wait until the lease term ends. You’ll have the opportunity to make some updates and improvements, and you can control the cleanliness and availability of the property during showings.
If you’re going to sell an occupied home six months into the lease period, your only potential buyers will be investors. There’s a lot of missed opportunity there, and it’s going to cost you money.
Mistake #3: Refusing to Invest Money into the Home
If you’re expecting to earn as much as possible when you sell your home, you’re going to have to make it look great. The Tampa real estate market is always competitive, and to earn the sales price you’re hoping for, you need potential buyers to fall in love with your home. This might mean updated, energy efficient appliances in the kitchen or a new shower in the master bath. Spending $2,000 before you sell the home is going to be worth the money when you earn back a five or 10 percent return.
Mistake #4: Not Staging Your Tampa Investment Property
Do not hold back when you’re setting a warm and welcoming atmosphere. This makes a big difference in how quickly you’ll sell your home and what price point you can negotiate. You’re not renting the home out to tenants – you’re selling it to people who may be living there themselves. Appeal to their emotions, and help them imagine themselves in the property.
We recommend professional staging to make your property look like a model home, where the brilliance of the property easily overshadows any minor flaws and results in higher sales prices. According to the National Association of Realtors 2017 Profile of Home Staging, 29% of sellers’ agents reported an increase of one to five percent in dollar value; 21% reported an increase of 8 to 10 percent, and 5% reported an increase of 11 to 15 percent in selling price when professionally staged.
These are the four most common mistakes we see when investors are selling their Tampa rental properties. We can help you have a better and more profitable experience. Contact us at Hoffman Realty.