How to Sell an Investment Property in Lincoln, NE

Are you done owning rental property in Lincoln? You’ve probably handled enough maintenance calls, and you’re ready to sell this thing and move your money somewhere else. The problem is that selling an investment property isn’t like selling a regular house. If you don’t do it right, you’ll lose thousands to taxes or bad decisions.

Most landlords don’t realize how much planning goes into the sale of an investment property. You can’t just list it and call it a day. There’s tenant stuff to handle and tax strategies to consider. Check out this whole guide to learn more!

How to Sell an Investment Property in Lincoln, NE

There’s an actual order to doing this right. You can’t just throw your property on Zillow and be done with it.

Step 1: Evaluate Your Financial Position and Tax Implications

The first thing you have to do is find your purchase documents and your mortgage statement. You need to know exactly what you paid for this place and what you still owe. You also need to know what it’s worth now. The difference between those numbers is your gain, and the IRS wants a piece of it.

Investment properties don’t get the same tax breaks as your personal home, so every dollar of profit gets taxed. You’ve also got depreciation recapture to deal with.

Call your accountant and run these numbers before you list the property. You might find out that a 1031 exchange saves you a lot of money. You might also realize you’re better off just taking the hit and moving on.

Either way, you need to know what you’re working with so you don’t end up shocked when tax season comes. If you need guidance or want a quicker, stress-free selling option, don’t hesitate to contact Reliable Cash House Buyers for support.

Step 2: Determine Your Lincoln Property’s Market Value

What you think your property is worth and what it’s actually worth are probably two different numbers. Yes, you put in new appliances last year, and the roof is still intact, but buyers only care about what similar places are selling for right now.

You need to pull up recent sales in your neighborhood. Check houses with the same size, condition, and general area. If three-bedroom rentals on your street sold for $240,000 last month, yours isn’t worth $280,000 just because you love it.

You can hire an appraiser if you want the official number. You can also do your homework on the MLS and get pretty close. Just be honest with yourself about what the market will actually pay. Overpricing your property means it sits there getting stale while other listings sell around you.

Step 3: Address Your Tenant Situation

If you’ve got tenants living there right now, you can’t just boot them out because you want to sell. Nebraska law says you need to give proper notice. If they’re on a lease, you’re stuck until it ends unless you want to negotiate an early exit.

Some buyers actually want tenants in place because they’re looking for rental income. However, most regular buyers will pass on your property if someone’s already living there.

Check the lease terms and figure out your timeline. You might need to wait it out or offer cash for keys to get them out early. You can also just sell it occupied and accept a smaller buyer pool. If you want a faster sale and don’t want to wait for tenants to move out, working with investor home buyers in Nebraska and surrounding cities can be a smart option since they often purchase tenant-occupied properties as-is.

Don’t try any sketchy moves to force them out. That’ll land you in court and cost you way more than just doing this properly.

Step 4: Prepare Your Investment Property for Sale

Your rental looks like a rental, and that’s not a compliment. Tenants beat up properties, and buyers notice every stain, scuff, and broken thing. Walk through and make a list of what needs fixing. You should patch holes, replace gross carpet, fix anything that’s actually broken, and slap fresh neutral paint on the walls.

You don’t need to renovate the whole place, but it needs to look clean and maintained. Mow the lawn and trim the bushes. Make sure the photos don’t look like a crime scene.

Buyers scroll through listings fast. If yours looks neglected online, they won’t even bother showing up.

Step 5: Choose Your Selling Method

You’ve got a few ways to sell this property, and none of them are perfect. List with an agent, and they’ll do the work but take 5% to 6% of your sale price. Sell it yourself and keep that commission, but now you’re fielding calls and doing showings on weekends.

On the other hand, iBuyers will give you an instant offer that’s probably lower than what you’d get on the open market. Cash buyers close fast with zero hassle, but again, you’re giving up some money for that speed. Many sellers who want a simple, quick closing often turn to cash home buyers in Lincoln and nearby cities for an as-is, no-stress solution.

Pick whichever one matters most to you right now. You can’t optimize for all three.

Step 6: Market Your Property and Find Buyers

If you hired an agent, they’ll handle the listings and showings. If you’re doing this solo, get your property on Zillow, Realtor.com, and Facebook Marketplace with decent photos and a straightforward description.

Don’t oversell it. Just say what it is, what’s been updated, and what neighborhood it’s in. Answer inquiries fast because buyers move on quickly. Ask if they’re pre-approved for financing or paying cash before you waste time on showings.

The last thing you need is to spend three weeks negotiating with someone who can’t actually close.

Step 7: Close the Sale

The real paperwork starts once you’ve got a buyer and an accepted offer. They’ll probably want an inspection, and they’re going to find stuff wrong with the property because inspectors always do.

You should decide ahead of time what you’re willing to fix and what you’re not. Some things are negotiable, while some aren’t worth your time or money. The buyer’s lender will order an appraisal to make sure the property is actually worth what they’re paying.

If it appraises low, you might need to renegotiate, or the deal could fall apart. Title companies handle most of the closing logistics. They also make sure there are no liens or weird ownership issues.

You should expect to sign a lot of paperwork and pay your closing costs, as well as any outstanding mortgage balance. That’s only when the money hits your account. The whole process from accepted offer to closing usually takes 30 to 45 days with traditional financing. Of course, it’s faster if it’s a cash deal.

Different Ways to Sell Your Investment Property in Lincoln

Your selling options are all pretty different. Each one works better depending on what you need right now and how much profit you’re trying to squeeze out of this sale.

Listing with a Real Estate Agent

This is the traditional route and probably what most people think of when they sell a house. You hire an agent, and they list your property on the MLS. They handle showings and deal with all the buyer negotiations. They’ve got the experience and the network, so your property gets in front of more potential buyers than you could reach on your own.

The downside is the commission. You’re paying around 5% to 6% of the sale price, which gets split between your agent and the buyer’s agent. On a $300,000 property, that’s $15,000 to $18,000 gone right off the top.

Some agents are worth every penny because they price it right and market it well. Others just throw it on Zillow and wait. You need to interview a few agents before you pick one. Ask what they’ll actually do to sell your property, and check their recent sales in Lincoln to see if they know the market.

Selling by Owner (FSBO)

If you go FSBO, you’re going to do everything yourself and keep that agent commission. This sounds amazing, but you also have to keep in mind that you will do lots of work. You’re doing the following:

• taking the photos
• writing the listing
• answering every single call and text
• scheduling showings around your actual life
• handling negotiations with buyers who know you don’t have professional backup.

You also don’t get automatic MLS access, so your reach is limited unless you pay for it separately. Some sellers pull this off and save thousands. Others waste months dealing with lowball offers and unqualified buyers before they finally hire an agent anyway.

If you’ve sold property before and you’ve got time to manage everything, FSBO can work. If this is your first rodeo or you’re busy with other stuff, you’ll probably regret it halfway through.

Selling to an iBuyer or Instant Offer Company

iBuyers are tech companies that use algorithms to make you an instant offer on your property. You submit some info online, they calculate numbers, and they will give you an offer within 48 hours. It’s stupid fast, and there are basically no showings or negotiations.

However, their offers usually come in below market value because they need room for profit. They’re also factoring in worst-case scenarios for repairs. They charge service fees that can run 5% to 7%, so you’re not necessarily saving money compared to using an agent.

This route makes sense if you need to sell immediately and you’re willing to leave some money on the table for the convenience. If you’ve got time and want top dollar, you need to keep looking at other options.

Selling to Cash Buyers

Cash buyers are investors or companies that buy properties outright without needing bank financing. They’ll usually buy your property as-is, which means you don’t have to fix anything or even clean it up.

There are no inspections and appraisals. There’s also no buyer backing out because their loan fell through. The whole process can close in a week or two instead of the usual month-plus timeline.

Yes, their offers are lower than what you’d get listing it traditionally, sometimes 10% to 20% below market value. But if you’ve got problem tenants you can’t get rid of, this option actually makes sense. You’re trading dollars for speed and certainty, and sometimes that trade is worth it.

Tax Implications of Selling an Investment Property

A lot of sellers get blindsided by taxes because investment properties get charged way harder than regular homes. The IRS doesn’t give you the same breaks. If you don’t plan ahead, you could lose a massive chunk of your profit.

Capital Gains Tax in Nebraska

Any profit you make from selling your investment property counts as a capital gain. The government wants its cut. If you’ve owned the property for more than a year, you’ll pay long-term capital gains tax. This ranges from 0% to 20% depending on your income bracket. Most people fall into the 15% range.

If you owned it for less than a year, it’s a short-term gain and gets taxed as regular income. This can hit 37% at the top end. Nebraska also charges state capital gains tax since it doesn’t have a separate rate. It just gets added to your regular state income tax.

That means you’re looking at federal and state taxes eating into your profit before you even see the money. The higher your income and the bigger your gain, the more you’ll owe.

How to Calculate Depreciation Recapture

Remember all those years you claimed depreciation on your taxes to lower your taxable income? The IRS remembers, too, and now they want some of that back. It’s called depreciation recapture. It gets taxed at 25% no matter what.

If you’ve been depreciating your property for ten years, that adds up to a pretty hefty bill when you sell. You can’t avoid it unless you’re doing a 1031 exchange, which we’ll talk about next.

Your accountant can calculate the exact amount, but just know it’s coming and it’s not optional. A lot of sellers forget about this part and then freak out when they realize how much they actually owe after the sale closes.

1031 Exchange Options

A 1031 exchange lets you sell your investment property and roll all the proceeds into another investment property without paying capital gains or depreciation recapture taxes right away.

It’s basically a tax deferral strategy. It can save you tens of thousands of dollars if you’re planning to buy another rental anyway. The rules are strict, though. You’ve got 45 days to identify potential replacement properties and 180 days to close on one of them.

You can’t touch the money from your sale either. It has to go through a qualified intermediary who holds it until you buy the replacement property.

If you miss those deadlines or mess up the process, the whole thing falls apart and you owe all the taxes. It’s not for everyone, that’s for sure.

Work with a Qualified Intermediary

You can’t do a 1031 exchange by yourself. The IRS requires you to use a qualified intermediary, which is basically a neutral third party who holds your sale proceeds until you buy your replacement property.

You never touch the money. It goes straight from the buyer to the intermediary, then from the intermediary to the seller of your new property. If you take possession of the cash for even a second, the whole exchange is disqualified, and you owe all the taxes.

Qualified intermediaries charge fees, usually somewhere between $800 and $2,000, depending on how complicated your deal is. Find one who’s experienced and actually knows what they’re doing, because one mistake from them can blow up your entire tax strategy.

Your real estate attorney or accountant can probably recommend someone who handles 1031 exchanges regularly in Nebraska.

Identify a Suitable Replacement Property

Your replacement property has to be of equal or greater value than what you sold. It has to be another investment property, not your personal residence. You’ve got 45 days from closing on your sale to officially identify up to three potential properties in writing to your qualified intermediary.

That timeline is tight, so you’d better start looking before you even close on your current property. Then you’ve got 180 days total to actually close on one of those identified properties.

A lot of people don’t succeed with this because they are too picky or they’re waiting too long to start their search. The clock starts ticking the second you sell, and there are no extensions.

If you can’t find something that works in time, the exchange fails. You’re stuck paying all those taxes you were trying to avoid.

Tips for Selling an Investment Property in Lincoln, NE

You can follow all the steps and derail the sale if you’re not paying attention to the details. These tips will help you avoid the most common mistakes sellers make.

Set the Right Price

Pricing your property wrong is the fastest way to kill a sale. Always look at what similar investment properties in your Lincoln neighborhood actually sold for in the last three months. Not what they were listed for, but what they closed at. Those are real numbers.

Factor in your property’s condition honestly. If the place next door sold for $250,000, but it was renovated and yours needs work, you can’t expect the same price.

A lot of sellers get emotionally attached to their number and refuse to budge, then wonder why nobody’s making offers. The market doesn’t care about your feelings or how much you think it should be worth. Price it at what buyers will actually pay, and you’ll sell faster with less hassle.

Use Marketing Strategies That Work

Good photos are the first thing buyers see. Bad photos will kill your listing before anyone even reads the description. Take them during the day with all the lights on and curtains open.

Make sure you show every room and that the place looks clean and uncluttered. Write a description that’s straightforward and highlights what actually matters. These are things like square footage, recent updates, neighborhood perks, and rental income if it’s tenant-occupied.

Don’t use fluff like “charming” or “cozy” because buyers know that’s code for small and outdated. Post your listing everywhere, too. Post in MLS if you’re using an agent, Zillow, Realtor.com, Facebook Marketplace, and local real estate groups.

The more eyes on it, the better. If you’re getting lots of views but no showings, your photos probably suck. If you’re getting showings but no offers, your price is too high.

Screen Potential Buyers

Not everyone who shows interest can actually buy your property. You don’t want to waste weeks negotiating with someone who can’t get financing. Ask up front if they’re pre-approved for a mortgage or paying cash.

Pre-approval means a lender has already checked their finances and agreed to loan them money. Meanwhile, pre-qualified doesn’t mean much. It’s just a guess based on what the buyer told them.

Cash buyers are the easiest because there’s no loan to fall through. But you need to make sure they can actually prove they have the money. Some people will lowball you, hoping you’re desperate, and others will string you along with promises they can’t keep. If someone’s making an offer, ask for proof of funds or a pre-approval letter before you take them seriously.

It saves everyone time and keeps you from pulling your property off the market for a deal that’s never going to close.

Time Your Sale for Maximum Profit

Lincoln’s real estate market moves differently depending on the season. Spring and early summer are usually the busiest times because families want to move before the school year starts.

More buyers mean more competition, which can drive your price up. Winter is slower because there are fewer people house hunting when it’s freezing outside. You might sit on the market longer or get lower offers.

That said, serious buyers in winter are often more motivated because they need to move regardless of the weather. If your property needs work or looks better with greenery, wait until spring when everything looks alive instead of dead. If you need to sell fast and don’t care about squeezing out every dollar, winter might actually work in your favor with less competition from other sellers.

Check what’s happening in Lincoln right now. If inventory is low and buyers are fighting over properties, list it immediately. If there are many similar properties sitting unsold, you might want to wait or adjust your strategy.

Required Disclosures for Sellers

Nebraska law says you have to tell buyers about certain problems with your property before they buy it. You can’t just hide issues and hope nobody notices because that’s a recipe for disaster.

Sellers have to disclose material defects. These are anything that affects the property’s value or safety. You need to disclose foundation cracks, roof leaks, electrical problems, plumbing issues, past flooding, mold, and lead paint if the house was built before 1978.

Even if you fixed the problem, you still need to mention that it happened. Some sellers think they can get away with not mentioning stuff, but buyers can sue you after closing if they find out you knew about a problem and didn’t say anything.

It’s way cheaper and easier to just be honest up front. Buyers might negotiate a lower price or ask you to fix things, but at least you’re not dealing with a lawsuit six months down the road.

What Are the Closing Costs in Lincoln?

Closing costs in Lincoln usually run about 1% to 3% of the sale price for sellers, though it varies depending on your specific deal. You’ll pay for things like title insurance, transfer taxes, attorney fees if you’re using one, and any prorated property taxes you owe.

If you agreed to cover any of the buyer’s closing costs as part of the negotiation, that comes out of your proceeds, too. Recording fees, escrow fees, and HOA transfer fees might also apply, depending on your property.

If you’re paying off a mortgage, there could be payoff fees or prepayment penalties, though those are less common now. Your title company will give you a settlement statement before closing that breaks down exactly what you’re paying, so you’ll know where every dollar is going.

Just don’t be shocked when you see how much gets deducted from your sale price before the money actually hits your account.

Key Takeaways: How to Sell an Investment Property in Lincoln, NE

If you want to sell an investment property in Lincoln, you really need to know your numbers and not rush into decisions that’ll cost you later. Figure out your tax situation early so you’re not blindsided by capital gains and depreciation recapture. Also, get the property in decent shape and handle your tenants the right way.

If you’re tired of dealing with tenants, repairs, or a drawn-out sale process, we buy houses in Lincoln for cash. No showings or waiting around for financing to fall through. Give Reliable Cash House Buyers a call at (816) 451-0753, and we’ll make you a fair offer. You could have this whole thing wrapped up and move on with your life faster than you think.