In an ideal world, real estate investors would sell a property as soon as it hits the market and then they’d have all the time needed to find their next investment property. Unfortunately, we don’t live in an ideal world, and sometimes a real estate investor finds him/herself stuck in a chain of buying and selling property at the same time.
Buying a new investment property at the same time that you’re selling your current one is all about balance. While you can’t control everything that happens during this complicated process, there are things you can do to make everything run more smoothly. So, here are 5 practical tips to help you succeed in buying and selling a house at the same time.
Tip #1: Evaluate the Real Estate Market
The first thing you need to do is decide which to do first: sell your current investment property or buy a new one. Performing a real estate market analysis will help you develop a game plan for buying and selling property.
In addition, this is especially important if you’re selling in one market and buying a property in another. In this case, you’ll need to understand the condition of both markets. As a real estate investor, you mainly need to know the length of time it takes to buy and sell (in other words, the number of days properties are on the market for sale) to determine if you’re in a sellers’ market or a buyers’ market.
- Buyer’s Market: There are more properties available than people looking to buy. In this market, property investors have an easier time finding and buying new investment properties than selling.
- Seller’s Market: There are more buyers in the market than there are properties available. In this market, you’re likely to sell your income property quicker than finding a new one.
Related: Is the 2018 US Housing Market a Seller’s Market or a Buyer’s Market?
Tip #2: Understand the Ins and Outs of Your Finances
The next tip for a real estate investor buying and selling property at the same time is to know what’s feasible based on your financial standing. Thus, reach out to your mortgage lender and financial planner to see what you can afford to buy and what your current property is worth. Furthermore, different factors like the amount of liquid cash, the amount of equity in your investment property, and the loan you qualify for can all play a part in which path you should take.
To know how much your income property will reasonably sell for in the housing market, you’ll need to do a home inspection and a comparative market analysis. The home inspection will show you how much work needs to go into the property before selling it. Additionally, a comparative market analysis will show you how much properties similar to yours (real estate comps) in your area were sold for.
Related: How to Do Comparative Market Analysis Step by Step
Finally, if you’re buying and selling a house with a mortgage, you need to find out how much equity you have. This is the amount left over after taking the current market value of your property and deducting what’s remaining on your mortgage. Remember, you won’t access the equity you have until after the property is sold. Therefore, you need to consider whether or not you can buy your new investment property without tapping into that equity.
Tip #3: Hire an Experienced Real Estate Agent
Buying and selling a house at the same time can be overwhelming, so it’s helpful to have a professional by your side. An experienced real estate agent can analyze your local market and assess whether you’re buying and selling property in a buyer’s market or a seller’s market. Moreover, if you’re buying in a different housing market, you might want to consider hiring a second agent who is specialized in that area and has deep knowledge about its conditions.
Related: The Best Ways to Find a Real Estate Agent
In addition, your real estate agent will also help you determine the market value of your current income property. An agent will also use his/her experience and knowledge of the housing market to guide you to the best listing price – one that will help you sell on your timeline and for enough money to take the next step. Not only that, but an agent will also be able to answer any questions you have about the process of buying and selling property, talk to you about timing and the best strategy to follow, and help you negotiate with potential buyers and sellers.
Keep in mind, buying and selling a house at the same time is not a walk in the park. Thus, don’t just go with the first real estate agent that comes your way. Instead, find someone who is a professional that you can rely on, and who will help you make smart investment decisions.
Tip #4: Start Shopping Early
Since you’re buying and selling property at the same time, it only makes sense to start searching for your new income property early on. So, while you’re preparing your current property for sale, shop around for houses and see what’s available out there. This will help you eliminate and narrow down your options until you’ve found the best income property.
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Tip #5: Plan Ahead and Be Prepared
Our last tip for buying and selling property at the same time is to be prepared for whatever comes your way. For example, if you’re in a buyers’ market, you could manage to buy your second income property before selling the first. In this case, you might as well rent it out to make money in real estate. So, prepare to be a landlord while trying to sell your property at the same time.
Final Thoughts
Buying or selling an investment property alone is a stressful process, so you can only imagine how stressful buying and selling property at the same time is. With the above tips, however, a real estate investor can at least be sure that things run a bit more smoothly.
Have you ever found yourself selling and buying property at the same time? How did you manage the process?
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