Marketing a tenant-occupied property

[Brian Utley]

I made a cash purchase on a rental property almost 2 years ago without a clear understanding of how to access what a good return should look like & how to leverage money.  I haven't lost money on it but the more I've learned the more I've realized I should be finding deals with better margins.  I received word yesterday from my property manager that my tenants gave their notice & will be moving out in a month.  I see this as a good opportunity to sell the property & reinvest elsewhere.  I would obviously be looking for a quick turnaround here with the hopes of closing on the sale of the property as soon as the tenants move out.  To do so I'll need to market the property with the tenants still in there.  These have been trouble-free tenants but they clearly won't be as motivated to have the house looking its best for potential buyers like I would.  

What are your experiences in trying to market & sell a house with tenants still occupying it?  

On another related note, this sale would subject me to long-term capital gains taxes since I've held it over a year.  If I bought the property for $100k & sold for $110k, would that subject me to the 15% capital gains tax on $10k even if my net profit ended up around $0 after paying out ~$10k in closing costs & realtor commissions?

Thank you in advance for sharing your thoughts.  

Brian 

[Natalie Kolodij]

Originally posted by @Brian Utley:

I made a cash purchase on a rental property almost 2 years ago without a clear understanding of how to access what a good return should look like & how to leverage money.  I haven't lost money on it but the more I've learned the more I've realized I should be finding deals with better margins.  I received word yesterday from my property manager that my tenants gave their notice & will be moving out in a month.  I see this as a good opportunity to sell the property & reinvest elsewhere.  I would obviously be looking for a quick turnaround here with the hopes of closing on the sale of the property as soon as the tenants move out.  To do so I'll need to market the property with the tenants still in there.  These have been trouble-free tenants but they clearly won't be as motivated to have the house looking its best for potential buyers like I would.  

What are your experiences in trying to market & sell a house with tenants still occupying it?  

On another related note, this sale would subject me to long-term capital gains taxes since I've held it over a year.  If I bought the property for $100k & sold for $110k, would that subject me to the 15% capital gains tax on $10k even if my net profit ended up around $0 after paying out ~$10k in closing costs & realtor commissions?

Thank you in advance for sharing your thoughts.  

Brian 

 Hello Brian, 

Selling this product would be capital gains- however if you bought for $100k and sold for $110k my guess is there will be close to no gains. 

Your basis in the property will be:

Purchase price + closing costs + any improvements you made to the property 

Your gain will be:

Selling price (reduced by selling costs)  minus (-) Your basis.