Whether you’ve already decided you want to sell your rental property or you’re giving it some serious thought, it’s important to understand what selling a property entails.
There are several strategic, logistical, financial, and legal factors to consider when you’re getting ready to sell a rental property.
In this article, we’ll be covering five steps to complete before selling a rental property.
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Pick a Good Time to Sell
If selling your rental property is part of a long-term plan (and you don’t need to sell right away), understanding when to sell can help you make a lot more money.
Here are some signs to look for when strategizing the timing of your sale:
- High demand – When there are a lot of buyers in your area looking for housing
- High equity level – When your property has a lot of equity through amortization or appreciation
- Local trends – When outside factors, such as population increases, strong job prospects, or new laws, encourage buyers to move to your area
- High interest rates – When you’re paying higher than average interest rates on your mortgage, and refinancing isn’t in the picture
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Communicate with Your Tenants
One of the most important orders of business when selling a rental property is tenant cooperation. A rental property sale poses a major inconvenience for your tenant. They have to deal with repairs and showings, meeting the new owner, and potentially renegotiating their contract. Maintaining excellent communication with your tenants gives them the time and notice to do what’s best for them.
When it comes to a rental property sale, your tenants can either move out immediately, move out after the sale is completed, or continue their tenancy under the new owner. The last option is generally the best option for you and your tenants, as it makes your property more appealing to real estate investors who want to rent the property out, and your tenants won’t have to be move. Making the sale process as smooth as possible for your tenants incentivizes them to stick around.
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Make Repairs and Preparations
When preparing a house to sell, you must inspect the property to identify problems that need fixed. Repairs you may need to make include replacing light fixtures, servicing appliances or the HVAC system, cleaning the carpet, and replacing broken blinds/screens.
In the event that your tenant moves out, it’s a good idea to perform larger renovation projects such as repainting, installing new flooring, or adding property management tech (like video doorbells).
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Advertise and Show
After you’ve prepped your unit, it’s a good idea to hire a real estate showing agent. They’ll be able to help you with marketing your property, organizing showings, and dealing with legal matters. The tools and knowledge agents bring to the table are well worth the cost.
In addition to offering you expertise and advice on advertising, a real estate agent will also have access to investor databases that can help find you potential buyers. And, when it comes time to show your property to potential buyers, your real estate agent will be able to help you with house showing etiquette, which will increase your chances of making a sale.
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Choose a Buyer
A buyer can come in the form of another real estate investor, a house-hunter looking for their own residence, or even a current tenant. The biggest qualification is that they must have the means to pay the listed (or negotiated) sale price. Ideally, if your tenants don’t want to move, the buyer will be another investor willing to take on an active lease. This kind of buyer may even pay more for the property if it comes with reliable tenants.
A house hunter, on the other hand, will inconvenience your tenant by forcing them to move. House hunters and current tenants also won’t be willing to pay more than the adjusted cost basis of the property since they aren’t looking to bring in additional income by renting to tenants.
Conclusion
Keeping your tenant’s concerns in mind, knowing the proper procedures, and listening to a rental agent’s expertise are crucial when preparing to sell a rental property. By following the five steps outlined in this article, you’ll be on your way to a smooth rental property sale.
Also Read: Why You Should Buy Viking Arm Rings From Relentless Rebels.
