EINA! is your investment property starting to cost you money? As a property practitioner myself I see this all the time and I have seen and heard most of the movies when it comes to selling an investment property. Fact, margins for investment properties are being pushed hard at the moment. Job security is so yesterday, something nobody really has at the moment.
So, why are property investors selling?
I am not talking about property investors that buy between 2 and 10 properties a year, I am talking about someone that does well and think yes, let me buy a 2nd or a 3rd property.
- You see, often sellers don’t keep up with the current market as far as the rental prices are concerned.
- This results when rentals are not escalated per annum. Why, because we all get busy and it’s a secondary focus.
- The reason that rental increases per annum get neglected is that it takes time to actively manage a property portfolio. It is demanding and it takes up spare time. And you think, it’s just another R500 up from where I am, and you just don’t get there.
- And, if your investment property is bonded and your tenant gives notice you know you may be facing a month without rent but still have a bond to pay.
- If you do manage to rent your property quickly your rent is still covered which is great. But if you don’t manage to find a tenant you are stuck paying a bond for a property that is not tenanted and end up robbing Peter to pay Paul.
- What property investors often forget about is that a property needs to be maintained. When you know your property looks terrible because you have been robbing Peter to pay Paul you have also quite possibly not repainted or given your unit a face-lift.
- Furthermore, if you do get a tenant in, there is always a chance your tenant like so many others will find themselves in a position where they cannot pay rent. That’s a double problem because tenants have more rights than owners at the moment. Now you sit with a tenant who cannot move out and won’t move out. I am not trading on feat here, just fact, and I have been in the same position myself.
- What, it needs a repaint? Somehow this is always unexpected news. Then you realise that if you were to paint and refresh your unit, you could get another R5,000 per month. So, you do it but you eat into your savings to do so.
- Or the worst-case scenario is your unit stands empty waiting for a tenant and you are paying a bond and also levies if your property is in a sectional title. Ouch….
- And finally, you get a tenant that does not care for your property at all. Not going down that road and trust me I have seen almost all the movies on this too.
Need to sell your investment property?
If you are a property owner that has dabbled in buying a 2nd or a 3rd property and you simply realise it’s not for you, we can help. But beware, you should be considering very carefully the right asking price when you sell.
Outpricing yourself when selling an investment property?
- You will be angling for a quick sale because the costs keep going up. Ask yourself what your monthly costs per month are?
- You are already in debt with the bank and now you need to carry your monthly repayment every month without rent.
- Your levy amounts if your property is in a sectional title, start to push you into an uncomfortable place and the costs start to pile up.
- Your credit record gets affected.
- You want to get the best market-related price when you sell. All too often investors are the most stubborn sellers when it comes to agreeing on a market-related price. So as an estate agent you go in high meaning the seller tells you what they want for the sale.
- And then you sit. The listing attracts no interest. We get no potential buyers and at one or other point the agent starts to push for a price reduction. Either they got it wrong, the market has changed or the price was wrong, to begin with.
- You see if you are not getting enquiries, you will not get viewings. If you are not getting viewings nobody is going to put in an offer. And with no offers to buy, you keep raking up costs. And this could all be for the sake of R20,000. Do the maths folks. Levies over 3 months, 3 bond repayments, and you are already on R20,000 if indeed your price is sort of in the right place. If not then rent your unit out again and try again in 6-months.
So how do you go about selling an investment property?
Accepting that it’s not your thing, this whole property investment thing is not a bad thing. It’s actually a win. If you realise your money could be put to better use, then sell it. If you need more cash, remember a cash sale can take up to 6-weeks. If it’s a cash and bond transaction you are looking at 3-months tops once an offer to purchase is submitted to the attorneys. That’s 3 – 5 more bank repayments, that’s 3 – 5 months more levies and the list keeps growing.
But keep it real folks when you consider selling. The asking price is the most important decision you will make when you sell a home. The 2nd most important thing you will need to consider is the mandate. An open mandate will kill you. Your tenant will get unruly with agents by the dozen traipsing through their home. A dual mandate is a great option. I personally like a dual mandate because it keeps both agents on their toes, and you get great performance from a dual mandate. But the best of all is the sole mandate. The sole mandate gives one person the accountability to sell. One person orchestrates the process and one person is responsible. Trust me folks if you are not clear on why a sole mandate works, click here.
Is selling a schlep? Will I be running off my feet?
No. Not if you have the right agent at your side. The right agent will take ownership and accountability for the transfer process. Managing your tenant. Arrange professional photos that make your property pop online. Organising viewings. Providing regular (weekly) stats and giving feedback on all viewings. Take the offer and negotiate the best price when you sell. A tough agent will always push for more which is a win-win for you. A good agent may well have buyers lined up that are looking for something like you have to sell. A good agent will conclude, not always but often, a sale in 4 weeks.
A good agent is one that will take the reigns from you and run. A good agent keeps you posted. A good agent manages the process. But more importantly, a good agent will negotiate the best price and manage the transaction once the offer is submitted to a successful conclusion.
You see folks, it’s all the stuff you see that is the easy part. The valuation and it’s, not rocket science but some agents will tell you what you want to hear not what you need to hear. The photos are the easy part. The listing is the easy part.
Then comes the fun stuff and that takes care of the viewings. If you are generating loads of enquiries (4 – 6 minimum) per week you are in with a fighting chance. Then comes the offer. And your agent should be able to read the offer verbatim. No getting stuck and not really knowing what a clause means. No not sure and certainly no mistakes. Then the best part that most sellers consider is getting the offer into play. Submitting an offer that does not stick is where it all starts to unravel.
What’s most sad…
Seeing a property that is listed by more than 3 people. That equals problems. The seller looks desperate. The agents in some cases have the property marketed at different prices. The photos are shocking, and your property looks sad. But most sad is when the sale gets submitted, and you have no idea whether the agent you mandate is a strong and seasoned agent. You see if you are in the space where you will only hear what you want to hear, not what you need to hear, then be sure your savings will soon be depleted because it will take you months to sell your property.
Oh, and make sure when you sign your mandate that the person doing your valuation will be the one and the only one accountable for your sale. Some of the fixed fee agents handoff on the process so the person who you start with never completes the race with you. You never even meet the people face to face that is managing the sale of your biggest asset!
Oh and here is the oldest saying in our handbook…
By the way folks often the first offer you get is the best offer you will receive. Price it right and it sells overnight. Price it wrong and it takes long.
Estate Agents – want to know more about KW?
Keller Williams (USA) is a top real estate brand to work for. If you are an estate agent and want to know a little more drop me an e-mail. If you would like to leverage world-class technology to the benefit of all our stakeholders across the value chain and end up with a win-win every time, then let’s touch base. Also, read what makes Keller Williams the best!
Get in touch
So, if you need a valuation done on a property anywhere in Randburg or elsewhere in Jhb, we can help. Give us a call on telephone number (064) 549-3123. Alternatively, drop us an e-mail at kwselect@kwsa.co.za. We have a vast network of almost 1,500 top Keller Williams agents at our fingertips who are all just dying for the opportunity to partner with you to sell and conclude your property transaction in record time.
If you want to view all the Keller Williams properties across the country, click on our website to start the search for your dream home. Need help getting a pre-approved homeloan, it’s free and our strategic partners will find you the best rate over 20 years! And finally, if you are thinking of putting your property on the market and need a free property valuation, click here!
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