UK Buy to Let Property Investment Exit Strategy Advice
There’s a lot of guidance floating around the web about the property market, with many companies like RWinvest providing information on how to get started and how to manage your investment when you’re in the thick of it all. But what about when you’re looking to make some money and exit the buy to let market?
It’s something that you should have planned out before even stepping your foot on the property investment ladder, and essentially, it all depends on what your end goals are. Whether you’re sure about your strategy or thinking about diversifying it, take these options into consideration when debating how to play it.
Don’t Sell
If you are lucky enough to have no current mortgages on your properties, you can simply never sell them and pass them onto inheriting offspring after you’re gone. If your properties do have mortgages, they are now so much easier to acquire later on in life. Many think that it’s impossible to get a mortgage after the age of 60, when in fact, buy to let mortgages can be obtained until you are 100 years old, throwing out perceptions that old age deters your eligibility for a property loan.
Sell
Perhaps the most popular exit strategy about is to wholesale your property to a fellow investor. All your capital is wrapped up in your asset until you trade the property in for cash, so selling to an investor provides a quick and simple method to make a respectable profit. It also offers the hassle-free option of not having to evict current tenants as they can remain in the property under the new investor.
Alternately, you could sell the property on the open market without tenants, but this involves the more stressful process of losing tenants and having to cover costs without rental income during the period of time the property is on the market.
The downside of selling to investment companies or property agents is that they aim to get property prices down to the lowest possible cost, encouraging buyers to want to purchase a great deal. If you want to make the most money, selling to an investor is the path to follow.
Selling Before Completion
There is of course, the opportunity to sell on your investment in a project that has not even completed yet. If purchasing a unit in an off-plan development and your contract allows, you can choose to exit the buy to let sector by trading your investment in before it has been fully constructed. The benefits of this are that you can make considerable profits on your original investment.
Capital Gains Tax
When selling a property, it’s important to remember that you are liable to pay capital gains tax – a tax on the profit you make subsequent to selling your investment for cash. This depends on what rate of tax you pay. For Example, higher rate taxpayers owe 28% on any gross profit after the capital gains allowance.
