Investing in property can deliver long term gains. Here’s how to maximise your sale price
Some investors choose to buy a property, renovate and re-list it for sale to make a quick return. This is known as flipping. You might want to sell at some stage even if you take a buy-and-hold approach. It’s worth maximising the property’s sale price when you put the property on the market. That’s when capital growth becomes a reality.
Carefully planned renovations make a difference to your property’s value. Aim for improvements that will appeal to a wide range of buyers and get quotes from builders on the project’s likely cost. Local real estate agents can give you estimates of your sale price after the renovation.
Overcapitalising is a pitfall to avoid. This means money injected into renovations may not equal a higher selling price. Evaluate the cost versus the likely increase in the property’s market value to get the best result.
An important decision for a rental property is whether you sell with a tenant in place or wait until the lease has expired.
You can earn rent right up until the place is sold if you choose to keep it tenanted which helps with financial consistency. Buyers might also view a tenanted property as appealing — they receive rent from day one if they’re a property investor!
If you’re going for the tenanted option, you’ll need to arrange inspection times around the tenant. Selling while tenanted means you also have less control over how well the property is presented. One option you can explore is trimming the weekly rent in return for the tenant helping to present the property to a high standard.
Owner occupier buyers might also be worried about having to wait for the lease to expire before they can move in. Be sure to give the tenant plenty of notice in writing the property is being sold.
There are small improvements you can make to prepare the property for sale, with or without a tenant.
First impressions count so take the time to spruce up exterior areas. Painting fences, cleaning the driveway and adding a new letterbox can improve curb appeal. Repainting inside and out is a quick and easy way to minimise the visuals of wear and tear. Stick to light but neutral tones so the new buyer can imagine how the property would if they repaint.
You can also consider home staging if the property is untenanted. This may add to the cost of your sale significantly, but it can create a more ‘lived in’ look and give buyers a chance to see the property at its best. Your agent likely have contacts and ballpark pricing details for home staging consultants.
Speak with the agent about the best times for inspections. You should aim to time inspections for when the interior receives plenty of natural light and looks most pleasant inside.
Selling usually means an auction or private treaty. Your agent can advise on the best method, which is an important decision.
An auction doesn’t mean accepting any price. You can set a reserve price, which is the minimum price you’ll accept. The upside of auctions can be that the sale is normally unconditional, which means the buyer is committed to going ahead when the hammer falls. The highest bid could far exceed your expectations depending on market conditions, potentially giving you a higher capital gain than anticipated.
Consider your agent’s advice when deciding the reserve price. If you set the price too high, you run the risk of the property not selling, even if there are plenty of interested buyers. A good practice is to keep an eye on what’s happening in the local market before the auction. You might want to factor in that potential buyers being spoilt for choice and may be less willing to actively compete at auction if your property is one of many listed for sale.
If the property fails to sell at auction, you’ll still need to pay costs like the auctioneer’s fee. You’ll also need to consult your agent about the next steps.