As a real estate investor, there’ll be times when you wish to sell your rental property. Suppose the property’s value has appreciated considerably and you prefer selling off than renting it out, or you self-manage and are moving out of town. You’d want to sell off, seeing as you can no longer maintain the rental, and buy something closer in your new location.
Conversely, you can also sell your property if it’s making you lose money due to vacancy, jump out on time instead of losing out entirely. Regardless, you’ll need to discover the secrets to selling rental property in 2021, including when to sell a rental property at a loss.
Best Ways to Sell Your Rental Property
Selling an unoccupied home is often cut and dried. Simply stage it, list it, landscape it and wait for people to offer. The process is more complicated with a tenant-occupied property. For starters, you might want to look at the lease type in place. If your renters have a month-to-month lease, the procedure will entail:
- Sending them a written notice
- A reminder on the last day to remove their belongings
- Starting the eviction process if they don’t vacate the house on the scheduled date
Most landlords include an early termination clause in their lease. With these clauses, the landlord can break the lease under some circumstances, for instance, the owner’s desire to sell, major neglect of property, or lease terms not honored.
Conversely, when there isn’t any early termination clause and the lease is fixed-term, the property owner has less flexibility and the tenants more rights.
This detailed guide will help you if you’re thinking of selling your rental property in 2021. However, consider checking your state’s landlord-tenant law to avoid getting into trouble.
- Sell With an Active Lease
You can find a buyer that’ll buy your property and allow the tenants to complete their lease, after which the new owner can make further arrangements or keep the tenants under a new lease.
This home selling process is relatively smooth for the tenants, seller, and buyer. However, this type of sale isn’t usually listed on the MLS (multiple listing service). As such, your buyer pool comprises investors patient enough to wait until the lease expires before they can write a new lease, move in, or renovate. These types of buyers are difficult to find.
- Wait for Lease Expiration
Your tenants have a right to complete their lease term once they follow the rules and pay rent unless you have an early termination clause in the lease. So if you’re considering selling investment properties, your first option is to wait for the lease term to be completed before informing your tenants that you wish to sell and subsequently giving them a written notice.
- Sell to Your Tenant
Suppose you have a good tenant that cares for your home and wishes to buy, it’d be best to sell to them. This way, you have a relatively painless and quick sale, and you’ll be sure they’ll buy because it’s in their best interest to stay rather than leave.
If your tenant couldn’t get traditional financing, consider offering seller financing to receive regular payments from your tenant, taking into account default situations, payment schedule, and interest. Seller financing is often a temporary solution while the tenant sources for a mortgage.
- Pay Your Tenant to Vacate
You can negotiate with some tenants on a fixed-term lease to pay them to vacate. That way, the tenant sees an incentive to move, and the expense and pain of moving will be eased. However, depending on certain factors like moving costs, local rent price, remaining lease term, you might be doling out a considerable chunk of money to the tenants.
Therefore, before choosing this option, calculate the costs involved based on:
Rent Difference: Check if a nearby property is available and if it requires a higher rent, offer to handle the difference in rent for the remaining months left in your lease.
A Ballpark Number: You might have to consider paying the tenants a sweeter sum so they can move out faster if a quick sale of the property promises a huge return.
Moving Costs: Consider offering to reimburse your renters for their moving expenses.
Cover Security Deposit: You could offer to pay for their security deposit in their new place, seeing as it’s compulsory to pay a security deposit in their first month’s rent.
Choose an Agent and Market Your Property
Marketing a rental property to sell is the most tasking part of the entire process. To reach prospects and encourage them to make offers, you’ll need a marketing strategy. Ensure to hire a real estate agent with extensive experience in marketing properties via different platforms and knowledge in filling form 4979 sale of rental property.
Consider asking for referrals from people, including friends or family, to get the best agent. You can also search online for real estate agents or check your local newspapers for their advert. Then research potential candidates and interview them to choose the best fit.
Your agent will likely list your property on multiple platforms, including Facebook, Zillow, MLS, Realtor.com, amongst others. If your agent has a website, they can also list your property there. That way, you can easily find potential buyers and schedule showings until you get an offer.
Staging Your Rental Property
This practice helps the potential buyer visualize how the house will look when they live in your property. Staging makes the house appear homier. If you wish to stage your property to facilitate a quick sale, here are some tips:
- Keep the rooms airy and bright
- Remove debris and garbages
- Remove excess furniture
- Stage the most critical rooms like the master bedroom and living room
- Rent new furniture that suits your preferred aesthetics
- Add final touches like throw pillows, vases, folded towels, and fresh flowers
- Keep couches, chairs, and tables away from walls to create space
That way, the house appears livable and not littered with stuff. This practice increases the chances of potential buyers making an offer seeing as they can easily visualize themselves living in the house.
Summary
When selling rental property in 2021, you’d want to ensure you make the highest profit possible. Consider hiring a professional agent to help you find the best buyer. Your agent will provide you with professional advice regarding all aspects of selling, including the sale of rental property tax treatment and pricing strategy.
If you have a running lease, consider waiting for it to end before selling or offer to pay the tenants to move. Regardless of the option you choose, The Short Term Shop is available to help you sell your property.
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