Buying your first property will be one of the most demanding decisions that you will make. The decision as to what to buy, where to buy, how to buy and when to buy with all the issues that comes with these decisions can be overwhelming for a first timer. Many people cannot successfully navigate these processes without help or guidance from more experienced people. It is usually a make or break decision point for many people. If this first step is handled successfully, they are motivated to explore the possibilities in real estate investment. If this first step leads to a bad experience, they may find it difficult to engage in real estate investment for a very long time.
However, after buying this first property, the next and most difficult decision that a first-time real estate investor may face is whether or not to sell the property. The best case scenario is for an investor to hold on to his or her property investment for as long as possible. Infact, some will wish they can hold on to their property forever by instructing their beneficiaries not to sell their properties. But the reality is that at one time or the other, a real estate investor may be confronted with the need to sell. Experienced real estate investors will have experienced this at one time or the other but this will present a challenge to new real estate investors.
It is important to note that buying and selling properties is one of the ways of making money in real estate. There are several investors whose real estate investment strategy is to buy, hold and sell properties at a profit. Sometimes, they add value to these properties and sometimes they simply wait for the right time to sell. To operate at this level, you need experience and you must be an objective investor. If you are someone who finds it difficult to let go of things, this may not be the best line of business for you. However, if you are prepared to analyse your investments objectively and critically you are likely to thrive as a buy, hold and flip property investor.
There are many reasons why people decide to sell a property. Sometimes, it is due to the need to divest from an area and move their investments elsewhere. Sometimes, it is due to financial pressures that require urgent or significant amount of money that the investor believes could only be realised from that property sale. At other times, it can be as a result of the need to cash in on the massive capital appreciation that a property has gained and to use the profit to take position in another emerging location. It could also be to raise capital to invest in other businesses. Whatever the reason, this option will surface at some point or the other in your real estate investment journey.
The first-time property seller must think like experienced real estate investors. He must be sure that the sale of the property is the best decision under the circumstances and there must be a clear cut plan for the proceeds of the sale. The fact is that if you sell a property without a definite plan for the proceeds, you are likely to spend the money on frivolities, luxurious items, living large and other less noble allocation of resources. As a rule, some investors never sell a property without re-investing a portion of the earnings in purchasing another property somewhere. The first time seller should realise that selling the property is not the most important issue but how the proceeds of sale are used.
The timing of the sale is also very important. A property seller should avoid the need to sell the property in a hurry or under pressure because it places you at a disadvantage. Some real estate investors when confronted with threat of foreclosure by the bank were indecisive until it became too late. When a bank sells a mortgaged property, they use a forced sale value which is essentially the amount that covers the loan and the interest. The bank is not concerned with you making some money. In fact, the force sale value is the best amount they can get under current market condition and this can be less than the amount owed. However, if you seize the initiative and sell at a profit, you can pay the bank off and keep the difference.
Another element of timing in the sale is understanding the property cycle in your particular part of the world. The real estate market often goes in cycle of high, low and somewhere in between. It is an easy decision to make whether or not to sell in a high market. Since you are getting much more for your property than it is worth, this is the ideal market to sell. In a low market, the property market has lost significant value either as a result of an economic catastrophe or a bust in the property market. This is a buyers’ market and where possible, you should avoid selling your property during this period.
There are many steps between the decision to sell and the actual sale that require the engagement of experienced professionals to make them easier. It is possible for a property seller to handle the marketing, property inspection, negotiation and closing themselves but this approach is likely to give room for errors and delays. Real estate investment is a team effort that involves various strategic players. Experienced investors have their own team members and you should start building yours too. To make it easier for you to engage professionals, start by working with professionals based on referrals from trusted family members or friends. Consider the cost of engaging these professionals as part of your learning cost. It will save you from making several costly mistakes.