There are a lot of ins and outs to selling a rental property.
Whatever your reasons for selling, it’s important to have a solid understanding of the actions you must take in a rental property sale.
Here’s what you should know about preparing to sell your rental property:
Know the Best Time to Sell
Before you move forward with selling your property, it can be incredibly beneficial to wait for the optimal time, if you have the ability to do so. Here are four factors to look out for:
- Substantial equity in the property – If you have a high level of equity in your property as a result of appreciation or amortization, you’ll be able to make a hefty gain when you sell.
- High demand for housing – You’ll have the most success in selling when there are a lot of buyers looking for real estate in your market.
- High interest rates – You don’t want to continue paying above-average interest rates, so if refinancing isn’t a possibility, it’s probably a good time to sell.
- Local trends – Outside factors such as growing job prospects, population increases, or new laws may lead to an influx of worthwhile buyers in your area.
Maintain Communication with Tenants
Once you’ve decided that you want to sell your property, you must tell your tenants as soon as possible. When you’ve announced to them that you’re selling, your tenant basically has three options:
- They can move out immediately.
- They can wait for the sale to proceed and move out afterward.
- They can remain in the property in a lease with the new owner.
The third option is generally the best option for everyone. Your tenants won’t have to move, and you’ll benefit because selling your property with current tenancies is more appealing to real estate investors who are looking for reliable tenants to fill the property, which means they might pay more money for the sale. For these reasons, selling your property to another real estate investor who is actively looking for tenants is the best course of action.
Regardless, you must remember that a rental property sale will pose an inconvenience for your tenants. They’ll be subjected to frequent entries for repairs, showings, and meeting the new owner, and in the event that they do get to stay in the unit, they’ll have to renegotiate their lease contract. Being respectful and understanding of your tenant’s needs by maintaining good communication is not only courteous, but it also helps ensure their cooperation.
Make Repairs
A property in need of a lot of major repairs is not attractive to buyers. As such, when preparing a house to sell, you must perform a thorough inspection to identify any problems with the property and any repairs that need to be completed. If you have a tenant living in the unit, you’ll likely only be able to make basic repairs, including fixing or replacing appliances, light fixtures, and the HVAC system.
If you don’t have a tenant to worry about, or if they’re willing to coordinate schedules and be flexible, then you may want to consider larger projects like repainting, installing hardwood flooring, or adding property management tech.
Hire a Real Estate Agent
When you’re finishing up the necessary preparations and repairs, you’ll want to hire a real estate agent to help you with advertising and showing your property. Real estate agents have access to the Multiple Listing Service (MLS) and investor databases that will help with marketing your property to buyers. Furthermore, agents have the expertise to handle all the logistical and legal steps of selling a rental property.
Once you have buyers interested in your property, a real estate showing agent will be able to effectively communicate everything your property has to offer. They also have a background in house-showing etiquette, which you’ll need when it comes time to show your property to buyers.
Conclusion
Selling your rental property is an involved process with several steps to take and factors to consider. By having an adequate understanding of everything that goes into a rental property sale, from knowing when to sell to ensuring your property and tenants are ready for buyers, you’ll be well-equipped for a smooth and efficient transition out.
