Selling an investment property in Kansas City is a major decision. It is vital to sell at the right time to maximize profits on the sale of your property. However, selling an investment property is more complicated than a regular house sale. You may have to sell the building with tenants living in it. Also, there may be maintenance issues to resolve before the sale.
One of the challenges of selling an investment property is finding the right buyer. Property investors love crunching numbers to work out potential returns on investments. And suppose you are selling Kansas City investment real estate because it’s not making a profit. In that case, you may find it difficult to convince another investor to buy it quickly.
At Norton Home Solutions, we are local real estate investors who have experience buying and selling investment real estate. We have put together this guide to share our expertise with you. At the end of the article, you will learn about the fastest way to sell an investment property in Kansas City (KC).
Should You Sell Your Investment Property in Kansas City?
The decision to sell investment real estate is always a difficult one. If the market is right, and you’ve held the property for a long time, you could benefit from more significant capital gains. However, maintaining an investment property can be expensive. In some cases, it makes sense to sell the asset and move on.
Let’s look at market indicators when it’s the best time to sell your investment, or if you should hold on to the property.
The best times to sell an investment property in Kansas City
Here are a few scenarios that indicate you should look for a buyer for your investment property.
- Low Return on Investment (ROI)—If it costs more money to maintain the property it generates, it could be time to sell. You can recoup the equity from your investment and look for a more profitable one.
- You have other investment opportunities—Maybe you have found a better investment opportunity with a healthier ROI. It could be wise to sell your investment property if market conditions are right.
- You get Capital Gains Tax (CGT) benefits—Depending on how long you’ve had the property, you could benefit from CGT exemptions.
- You are retiring—If you plan to retire, you can free up capital by selling your investment.
The worst times to sell an investment property in Kansas City
In some cases, it doesn’t make sense to sell investment real estate. Of course, each investor’s circumstances are different. But here are a few things that Kansas City investors tell us about when you should hold on to your investment.
- The property has a healthy ROI—If you’re making healthy profits from your tenanted building—hold on to it.
- You purchased it in the previous five years—Buying and selling real estate is expensive. Usually, it’s best to wait for at least five years before thinking about offloading an investment property.
- There’s the growth potential—Investing in Kansas City real estate isn’t a “get-rich-quick” scheme. You look for long-term growth. So, if there’s potential for the property to start making money, hold off selling it.
Tax Considerations When Selling a Kansas City Investment Property
One of the most significant factors when selling investment properties in Missouri is paying tax. Sell at the right time—you can avoid paying CGT. However, if you get the timing wrong, you will pay a hefty amount to the IRS. Here are a few considerations where you can reduce or even avoid a tax bill.
- You live in your property—If you permanently live in the property, you could be partially exempt from CGT when you sell it.
- The property was your residence—If you lived in the property for at least 2 out of the last five years, you might qualify for a CGT reduction.
- Take advantage of IRS Section 1031—If you reinvest in a similar type of property, you could defer some of all of your CGT bill.
How to Sell an Investment Property When the Time is Right in Kansas City
If you decide that the time is right to sell your KC investment property, what should you do next? Here is a short guide to selling investment real estate.
1. Know the value of your property
First, you need to know how much money you could make if sell your investment property. In this case, it’s tricky to compare sales of similar properties like residential buildings. There are several calculators you can use to evaluate investment properties. Here are a few to consider:
- Cash-on-Cash Return calculator
- Gross Rent Multiplier calculator
- Price to Rent ratio
2. Compare real estate agents
You could contact real estate agents in the Kansas City area to appraise your investment property’s value. However, just because they give you an acceptable appraisal doesn’t mean they guarantee to sell your property for that price.
3. Consider selling to a real estate investor
Another way to sell an investment property is to find a local real estate investor. Trusted Kansas City investment firms buy properties in any condition. You can sell your investment property with tenants still living there. What’s more, local companies such as Norton Home Solutions take care of all the selling fees—allowing you to sell your investment property for the best price.
4. Consider CGT impact
Selling an investment property can incur a sizeable tax bill. Capital Gains Tax can be up to 15% on the sale of your property. So, consider that before selling.
5. Communicate with tenants
Regardless if you are selling an investment property with tenants living there or not, you need to communicate with them. For example, the rental agreement and local laws require landlords to give tenants notice before entering a rental unit. So, if inspections are planned, you will need to give tenants fair warning.
Selling an Investment Property with Tenants
There are pros and cons of selling investment real estate in KC with tenants living there. Usually, you can sell your property faster and with less hassle if tenants remain. However, not all real estate investors want to buy buildings with inhabitants.
Here are the pros and cons of selling a tenanted property:
Pros:
- You continue to receive income up until the final sale
- Many investors prefer buying properties that already have tenants
- Sell your investment property faster
Cons:
- Dealing with tenants can be tricky, especially if you own a multi-family property
- Tenants may not show the property in the best light
- Some investors are looking for investment opportunities to repurpose the building’s use
- You need to get tenants to sign an estoppel certificate.
The Fastest Way to Sell a Kansas City Investment Property
The best way to sell an investment property in Kansas City is to a group of investors. We buy properties in any condition—even if there are still tenants living there. You may be surprised at how fast you can sell your property. In many cases, we can close the deal in less than seven days. This way, you can quickly free up equity in your property and reinvest it somewhere else.
But what if you’re unsure of selling your property just now? How do you know if the market in Kansas City is right for selling investment real estate?
Give us a call at (816) 685-0260 or fill out the easy website form below. We can crunch the numbers together. Our investors’ team is ready to give you the best advice if you should keep the property or sell it directly. We can also discuss other solutions to help you maximize ROI on your investment property.