Becoming a landlord boosts your finances significantly. If done correctly, owning rental properties allows you access to regular cash flow and tax breaks and builds equity. While this is life-changing, several situations may force you into selling your rental property. Like any other typical real estate transaction, selling your rental property has its fair share of challenges. Below are two main tips for selling your rental property.
Who to Sell Your Rental Property To
Most rental property owners need clarification about the potential buyers when listing their properties for sale. Unfortunately, rental properties aren’t in as much demand as residential homes. Nonetheless, you can sell your rental property to the following potential buyers:
Sell to cash buyers
You should consider selling your rental properties to a cash home buyer. These companies are the easiest and fastest option for anyone looking to dispose of a rental property faster without renovating. Here, you don’t have to worry about scheduling repairs, hosting open houses, evicting tenants, or dealing with tedious paperwork. A home-buying company takes charge of all responsibilities upon completion of the sale.
Auction Your Rental Property
Auctioning is another easy way to sell your property at a fair market price. Like cash buyers, auctioning saves you time as you won’t have to negotiate with potential buyers or schedule open houses. Most auctions have a minimum sales price, so you’ll sell close to the market value. The competitive nature of the auction process also means you’ll get serious buyers.
Use TheHouseShop
You can also sell your rental property for free through our site, TheHouseShop.com. Our property listing platform uses private channels to market your property to potential buyers. We significantly differ from multiple listing services.
- Access to exclusive clientele
- Preserves your privacy, especially for public figures or celebrities
- Great bidding wars
- You won’t have to share the price reductions publicly
Like an auction, you should build a buzz around your property to attract potential buyers.
Sell the Rental Property to Your Tenant
Potential buyers of your rental property may be living right in your apartments. Some states have provisions that landlords should prioritise tenants when selling their properties. Entering into a rent-to-own agreement with your tenants is an efficient way of selling your rental property. This means you’ll avoid the hassle of listing your home, hosting open houses, and waiting for weeks in the property market.
How to Sell Your Rental Property
Selling a rental property comes with slightly complicated intricacies. Consider the following before listing your rental property for sale:
Honor Lease Periods
Unlike residential properties, you can’t sell an occupied rental property without consulting your tenants. You can’t decide to sell the property anytime unless you have an early lease termination clause. This might be disappointing for landlords who want to dispose of their properties quickly. You can navigate this issue through:
- Paying your tenants to vacate: Offering to pay your tenants to vacate is a more accessible and straightforward option. Here, you agree to cater to their security deposit, rent increase, and moving expenses.
- Wait until the tenant’s lease expires: You can also wait until your tenant’s lease expires. This is the simplest and most preferred option but doesn’t favour landlords who want immediate cash.
- Find a potential buyer who can purchase the property with a lease: This is a viable option to save time and money. Unfortunately, finding a buyer willing to buy the property with an ongoing lease takes time.
The fourth and most preferred option is selling to your tenant. Remember to consult state-specific laws on selling rental properties with tenants.
Evaluate if the Property Needs Repairs
You should inspect the rental property for necessary repairs, even if you sell it to cash buyers. Most state laws require property owners to disclose any structural and systemic defects in their properties to potential buyers. If the property is vacant, consider making simple upgrades to modernise the house. Fresh paint, new lighting fixtures, window treatments, and hard-surface floors increase property value and attract potential buyers.
Consider Living in the Rental Property Before Selling
In the US, Moving into the house at least two years before selling makes you eligible for the IRS’ “ownership and use” criteria, which is beneficial if you want to avoid paying taxes after the sale. Passing these criteria means you are eligible for a waiver on up to $250,000 and $500,000 capital gains taxes for single and joint properties, respectively.
Endnote
The rental property market is competitive, with owners offloading their listed homes within weeks. This competitive nature has fueled the increase in cash offers. However, you should be wary of various intrigues surrounding the sale of rental properties, especially surrounding tenant agreements and taxes.
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