How to Sell a Property Portfolio
To sell a residential estate, one must first identify potential clients. Once potential purchasers are identified, the seller must then determine the value of the portfolio. The value of the portfolio will be based on many factors, including location, type of property, and current market conditions. After the value is determined, the seller will need to negotiate to reach a final sales price.
There are certain things you have to keep in mind while selling your residential or commercial portfolio. When selling your portfolio will need to provide some basic information to your conveyancer or property solicitor. This information will allow them to compile the necessary documentation to support your sale. This can include:
- The full details of your portfolio including any outstanding mortgages, charges or other financial encumbrances
- Your current contact details and next of kin information
- Details of any existing tenancy agreements and licensing certificates that are in place
- A council search request so that the local authority can confirm there are no outstanding planning permissions or liabilities on the property being sold
Do you have current tenants?
The success of your sale depends hugely on the current state of your tenants. There will be some investors happy to purchase your property with current residents while others may want vacant possession. If your property is a buy-to-let it is highly recommended that you look into selling it to a landlord or a cash buyer as they will happily buy your portfolio without hesitation as well as it will help you avoid getting into any legalities.
Sitting Tenants or Regulated Tenancies
If you’re trying to sell a portfolio of properties that already have Regulated Tenants, it might be harder as potential buyers may not get any mortgages on these. Lenders do not like Regulated Tenancies.If you’re looking to sell a property portfolio that includes properties with such tenants, you must be mindful that the market for such properties is somewhat limited. Selling this type of property can involve seeking specialised assistance and guidance in order to make a successful sale.
AST or Periodic Tenancies
An Assured Shorthold Tenancy (AST) normally runs for 6 months, after which it becomes a periodic tenancy. This way, you can be sure that if there are any problems with the tenants, the person who wants to buy the house can just serve notice at end of the required notice period. Additionally, this enables prospective buyers to have more options for raising finance.
If you are looking to offload your property portfolio, it may be easier to sell those with tenants under rolling contracts than those which have tenants protected by an assured shorthold tenancy (AST) agreement. The market size for tenanted properties is growing, so now could be a great time to take advantage!
Selling off your property portfolio when the units are empty may not be the most financially beneficial option. Most of the time, it’s better to keep your tenants because they’ll pay you rent every month and you won’t have to pay as much for advertising or finding new tenants.
There are many ways through which you can sell your property.
There are many ways through which you can sell your property.
1- Landlord to landlord:
There are many landlords and investors who are interested in buying ready made portfolios, at the right price. Many seek portfolios through estate agents, alterternatively many make their way to auctions, but that will NOT guarantee a good price. This is very common for landlords wanting early retirement.
2- Market your Portfolio:
An alternative for auction sale is to market the tenanted property to Housing Associations, who are on the search for their housing clients.
The first thing you need to do is create a schedule for all of your properties. You should include information about each property, such as square footage, a number of bedrooms and bathrooms, and any special features, including photos of each property.
Search for housing associations in your locality.
Once you have found a few potential , it is time to negotiate a price. When negotiating a price, it is important to be reasonable. Remember that you are trying to sell your entire portfolio, not just one property. It is also important to keep in mind that you may have to pay a commission to the estate agent or investment firm if they help you sell your property.
It is worth remembering that while selling to another landlord. You will have to conduct multiple viewings, depending on the number of interested purchasers. So you must have your residents on your side, in other cases, it would be difficult for you to show your property, which can hugely affect your ability to sell.
3- Property Investor:
The third option is that you can send your portfolio to a private property investor, this is the best option because property investors complete the purchase quickly, can show liquidity, and also their prices are fairer than housing associations and local authorities.
Some of the benefits of choosing an investor include:
- Once the price is agreed upon, the completion of the sale tends to go fast, and sometimes the process is completed within days
- The investors take over the responsibility of the tenants so you won’t have to worry about that.
- You won’t have to bother your tenants with multiple viewing as the inspection, in this case, involves a single visit
- You won’t have to worry about getting paid as most of the sale happens with cash. This is a great relief as you won’t be left hanging and waiting around to see the potential buyer to raise capital to process the purchase.
There are many factors that affect the whole process as well as there are many options you can choose from to sell your property. However, before making any choice it is very necessary that you analyze the market price and chose the option that gives you a fair deal in terms of price, issues related to tenants, and eliminating any need to wait around for payment. It is also highly recommended that you stay on good terms with your tenants so they may co-operate with you on multiple viewing. With all these considerations in mind, you will be able to make a well-informed decision regarding your sale
Frequently Asked Questions
What’s The Best Way To Sell Of Buy To Lets?
The best way to sell buy-to-let properties is by selling them to another landlord who’s looking for a good investment. The alternative would be letting the tenants-in-situ stay in their current residence while you convert each home back into residential housing and try to find potential buyers that are willing to live there. It may take some time, but it will provide more cash upfront than if you try finding individual buyers or renters for all these homes at once!
Is selling my property as a whole worth it when looking to sell properties individually?
At first glance, it may seem like your estate is worth the sum of its parts. But there are a few things you need to consider before making any decisions about selling: how long do I want my money tied up? How much will be left over after paying off mortgages and other debts? What’s more important–the revenue from one sale now, or holding on for the best value in five years’ time?”
What tax do I need to pay?
The likely tax you’ll pay when selling your investment is Capital Gains Tax (CGT). There are no reliefs to be had as a buyer. Plus the only deduction that can be made from CGT profit is the free allowance, which for 2022/23 is £12,000. Across a large portfolio of properties worth millions, this won’t make much difference on your final tax bill either way!
How to sell through an Agency or Auction House?
We are able to provide guidance and advice on how to go about this process.
How do I value my portfolio?
Typically call 3 commercial estate agents and get them to value a number of properties. If they are scattered all over the country, then use a greater number and average out.
Is the property market flooded with?
Landlords in Britain are giving up on owning property as the market becomes more difficult to navigate. A new report finds that landlords plan to sell nearly 7% of their properties, while only 16% plan to buy additional ones; and a third of all rental owners have plans to cull their holdings by one-third over the next year alone. The Nottingham Building Society surveyed 2,000 people with rental homes who found that 36 percent had definite intentions not just for this coming year but also into 2023 if things don’t change soon
What happens if you sell a property in negative equity?
Selling a house in negative equity is expensive, you’ll need to break your mortgage terms and should only do so if you’re severely financially troubled. Selling the property will not cover what you owe on their mortgage which means you won’t be able to pay it off – meaning that selling can put you at risk for bankruptcy and/or a complete write-off of your credit score (depending on how much you owe).
What are portfolio landlords?
A portfolio is a collection of investments, held by an individual or organization. The term is also used to refer to the holdings of a professional money manager, such as an investment counselor or registered investment advisor. A portfolio may contain a wide variety of investments, including stocks, bonds, real estate, cash and cash equivalents, and other asset classes.
Buy to let is a type of investment property purchased with the intention of earning rental income and capital appreciation. Cash flow is the net amount of cash that an entity receives or spends over a period of time.
Want to find out how much your property is worth?
If you’re thinking about selling, the first step is to find out how much your rental property portfolio is worth, and whether you can get market value. You can do this by contacting a buying company or estate agent, who will give you an estimate of the value based on current market conditions, based on their due diligence. However, it’s important to remember that the buyer is under no obligation to sell to you, and they may think it is worth less than you expect to achieve. If you’re not happy with the offer, you can always try negotiating with the buyer or look for another buyer.
Should you sell the properties individually?
If you are considering selling individual properties there are a few things to keep in mind. First, if you have tenants in place, you will need to give them notice and time to find a new place to live. Second, selling your may take longer than selling them as part of a portfolio, and you may not get as much money for each property. Third, if you sell them individually, you will be responsible for paying CGT on the sale of each property. Finally, you will need to find a buyer for each property, which can be done through an estate agent or auction house.
What happens with sitting tenants when I sell my property portfolio?
When you sell your portfolio of buy-to-lets, the occupants become the responsibility of the new owner, who may choose to eviction, or to keep them on as sitting tenants.
Dealing with Tenants When Selling a landlord portfolio?
If you’re selling an estate, there are a few things to keep in mind when it comes to your tenants. First and foremost, you’ll need to make sure that any buyers are aware of the tenants and their rights. Secondly, you should be prepared for the possibility that tenants may try to stop paying rent or even attempt to evict themselves once they find out the property is being sold. Finally, if you have a property manager in place, be sure to update them on the situation so they can help manage any tenant issues that may arise.
What are the tax implications of selling a large property investment?
When it comes to selling a large investment of properties, the main thing to be aware of are the potential CGT that could be owed. Depending on how it is structured, it may be possible to minimize or even eliminate any taxation by selling properties in a certain order or through specific strategies. However, it’s always best to consult with a tax professional beforehand to ensure you are taking the best possible approach. Other than capital gains taxes, there may also be implications for buy-to-let owners and investors, as well as those who have tenants in their properties. Ultimately, it’s important to weigh all the potential pros and cons before making any decisions about selling.
Considering the Section 24 tax (Tenant Tax) impact on your decision to sell your buy to let investment portfolio
When you sell your investment property, the taxes you’ll most likely pay are Capital Gains Taxes (CGT). Unfortunately, as an investor, there are no reliefs or deductions you can make from your CGT profit. The only exception is the Capital Gains Tax-free allowance.
Which for 2022/23 is £12,000. £12,000 across a large number of properties worth hundreds or millions of Pounds won’t make much of a dent in your tax bill.
Selling a large investment portfolio, using an option agreement or a lease option contract might be a better solution. If you use this option when you sell your property, you’ll mitigate or at least spread your future tax liability over different tax years.