Moving season is almost upon us, and already people are beginning to look for open listings. If you are a landlord or property owner, prepping is vital to ensuring that you can attract qualified buyers and renters. Don’t risk falling behind this moving season, here are some tips to help you get started.
The Best Time of Year for Moving
More than any other time of the year, Americans move more during the summer. In 2016 13.9% of moves occurred in June with only 3.3% occurring in December. Buyers and renters prefer the warmer weather for moving, as it makes the process slightly less uncomfortable. No one wants to unpack a moving van in three feet of snow. Because of this readying your property for viewing is essential as the months start getting warmer.
To get started consider thinking about listing your property early to help drum up interest. Sites like Trulia and Zillow offer great ways for property owners and landlords to list their homes and apartments. Even if you’re not completely done with updates or renovations, putting your property up for viewing can help give you more exposure and a better chance of finding serious buyers and renters.
You may also consider working with a real estate agent to help draw in additional interest. Agents may also be able to advise on the best updates to make to your property to increase appeal. While working with a real estate will cost money, their insight can be invaluable, especially when it comes to prepping and selling a home.
Checking Your Finances
Before you get too far ahead of the game, it’s also important to make sure that your finances are in order. In 2016, homeowners in the U.S. paid over $88 billion in assessments towards community associations. When factoring in improvements to your property, the cost of both improvements you make to the property and those which a homeowner’s association has made to the common areas should be factored into your adjusted basis. Any pro-rata share of these costs is important to take note of. If you’re unsure, your homeowner’s association should be able to tell you exactly.
Taxes can be another tricky aspect to navigate if you are selling your property outright, as opposed to leasing it out. Capital gain is something to look out for and it occurs when you sell something for a net profit that is relative to what you paid to acquire it originally. For instance, if you purchase a stock for $1,000 and later sell it for $1,500, you are receiving $500 in capital gain.
When selling a home, sellers who file jointly can expect to take advantage of a primary residence or home sale gain exclusion. Simply put, this exclusion allows you to exclude up to $500,000 in capital gains. Single filers can likewise exclude up to $250,000 when selling a primary home. To qualify for this exclusion you had to have lived at the property for two of the past five years and owned it for the same length of time.
If you’re at risk of acquiring capital gain from your sale you can consider completing a 1031 exchange. This allows you to use the proceeds from your sold property towards the purchase of another. This allows you to put off acquiring capital gain until you decide to sell again. In which case you are allowed to exchange again and continue deferment.
Making sure that your finances are arranged before selling a property is essential for avoiding any unexpected charges that you may be unprepared to pay.
If you’re a landlord renting out a property, it’s important to also take stock of how much you can afford to put in towards renovations and other costs, such as hiring a real estate agent to help you find qualified renters. For instance, if your last tenant caused a large amount of damage, you’ll need to estimate the total cost of repairs alongside any insurance, mortgage, or property taxes that may need to be paid while you’re without a renter.
Repairs and Renovations
The above leads us to the next point of renovations. Whether you are fixing up your own home for sale or fixing up a rental property for the next tenant, it’s important to consider what improvements are going to generate the greatest returns. With the construction market in the United States being the second largest construction market in the world, you’ll want to know exactly what you’re hiring contractors and construction workers for before you start your renovations.
A couple of the best renovations and repairs to make include:
- Flooring: If your property has old worn out flooring, replacing it can help make the whole of your home look nicer. One of the biggest turn-offs for potential tenents can be walking into a showing only to see old carpeting and stains. If possible, invest in either laminate, hardwood, or stain-resistant carpeting, especially in rental properties. These materials will both look better and last longer than alternatives.
- Paint: Repainting your property before selling is a must. It can help coverup discolorations and make the walls look bright and new. Despite our best efforts paint can wear over time, and if it has been a couple of years since your last paint job, it’s time for a redo. When painting, consider sticking with neutral colors so that the home remains customizable for whoever moves in next.
- New Appliances: Rents and homebuyers love homes with updated appliances. If your property is currently sporting appliances 10 or more years old, consider updating them if you can. An important place to start is in the kitchen. Even minor kitchen remodels and upgrades can land you an ROI of nearly 80%. Other desirable items can include washers and dryers, especially those that are EnergyStar rated.
- Bathroom Renovations: Bathrooms are one of the most used rooms in a home and making sure they look clean, neat, and modern is important. Resurfacing a bathtub, replacing old showerheads, and adding updated vanities and toilets can transform an otherwise dull space.
- Lighting: Energy-efficient lighting is another must-have for many renters and buyers. Consider switching out old light fixtures and installing LEDs or CFLs instead. You may also consider adding additional lighting to spaces that would otherwise be too dim. Extra lighting can make even small rooms feel lighter and more open.
While the repairs and renovations you decide to do will depend on your finances and how much work needs to be done on your property. Some spaces will need more work than others, especially if you’re managing an older building or trying to fix up an old home. However, even simple upgrades, such as the ones mentioned above, can help you get more out of your property and allow you to enjoy a larger ROI.
Now’s the Time
With spring close approaching, now is the time to begin thinking about how you can prepare for moving season. Keep in mind how you can best advertise your property, while also taking steps to fix up what you have for the greatest returns. With the tax deadline hitting in April, now is also a good time to begin settling any taxes or finances that might pose a problem during selling.
If necessary don’t hesitate to reach out to a real estate agent or a tax professional to help you with any property or financing issues that you’re uncertain about. It’s always better to cover all of your bases than risk facing a loss in the future.
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