If you own one or more residential rental properties, you may have considered selling – particularly in the hot real estate market we have seen over the past year or so. But even if you have a substantial amount of equity in your property(ies), it is still necessary to determine the various expenses you could incur upon a sale.
These could consume up to 10% of the sale price of the home and/or apartment building you are selling, and may include the following:
- Closing costs
- Realtor commission
If you generate a profit on the sale of a property, it is likely that you will owe taxes on it. The amount that you owe will depend on how long you have owned the property, as well as whether or not you lived in the home as your personal residence for two out of the past five years.
As the seller of real estate, you can also owe closing costs, such as:
- Transfer taxes
- Title insurance
- Attorney’s fees
- Escrow fees
- Courier fees
Buyers will oftentimes have an inspection performed on a property before the purchase is finalized. That way, if there are any major defects, the purchaser may get out of the contract. The cost of an inspection will typically be dependent on the size and type of property you are selling.
If you’re not selling your property “as-is,” it is possible that the buyer may want you to make various repairs. The cost of doing so, however, can cut into the total amount of net profit you could make on the sale.
Depending on whether or not you list the property you have for sale with an agent or broker, you may find yourself handing over 5% to 6% in realtor commissions. In return for this fee, the real estate professional should provide you with a long list of services, such as marketing and showing the property, negotiating the price and closing date with potential buyers, setting up inspections, working with the title company, and communicating with you throughout the entire transaction.
In some cases, it may make more sense to hang on to a rental property – even if you do not have the time to manage it. In this case, hiring an experienced property manager could eliminate these tasks from your schedule, while at the same time still allowing you to generate ongoing cash flow.
So, if you own residential rental property in Orlando or Central Florida, give us a call and we will provide you with more details on the many benefits of having a professional property management team on your side.