There’s a point in most landlords’ careers where they decide it’s time to sell their rental property.
There are a variety of reasons to sell your rental property: capitalizing on your property’s appreciation, moving to a different market, or investing your time and money elsewhere after having benefited from the monthly cashflow.
Whatever the case, selling your property can be an involved process. The last thing you want is for a rental property sale to cost you a lot of time and money.
Here are some ways you can profit on your rental property sale:
Selling at the Right Time
One of the most important decisions you can make when selling a rental property is choosing the right time to sell. If selling your rental property is part of a long-term plan where you have flexibility in terms of when you can sell, then you should be on the lookout for the following factors:
- High demand for housing – If there are a lot of buyers in your area waiting for real estate to enter the market
- High equity in the property – If your property has built up a lot of equity through appreciation or amortization so that when you sell, you have a substantial gain
- Local trends – If outside factors such as population increases, job prospects, or new laws lead to an influx of buyers in your area
- High interest rates – If you’re paying higher-than-average interest rates on your mortgage and aren’t able to refinance
The difference in the profit you can make between selling at the right time and the wrong time is substantial. When you’re thinking about selling, make sure to do ample research on your current market’s trends to ensure that you maximize your profits.
Making Repairs, Renovations, and Improvements
When you decide to sell the property, you must inspect the unit to make sure it’s in good condition. After you identify any problems that need to be fixed, you can start repairing the most basic and necessary damages. Preparing a house to sell includes servicing appliances/the HVAC system, repairing dents and holes in the drywall, cleaning the carpet, and replacing light fixtures.
After making necessary repairs, and if you don’t have a tenant currently living in the unit, you may consider making improvements and renovations to boost your property’s value. Potential renovations and improvements may include adding a coat of paint to the walls, installing hardwood flooring, and adding property management tech, such as video doorbells.
Choosing the Right Buyer
A real estate buyer may be a current tenant, a house hunter looking for a place to live, or another real estate investor. While any buyer with the means to pay the listed sales price or negotiate an acceptable price is a viable option, the best buyer is another real estate investor looking to take on active leases.
If your unit is currently filled with tenants, selling to someone with no intention of renting the property out will force your tenants to move. Not only does this inconvenience your tenants, but you could be limiting the amount of money you make from the sale.
An active lease is very appealing for investors looking to buy a property for rental purposes. They won’t have to go through the trouble of preparing, advertising, and filling the unit with a tenant. A high-quality tenant who’s already there and can start paying rent immediately boosts the value of your property. As such, an investor would be willing to pay more for a property that has an active lease, whereas house hunters and current tenants wouldn’t have this incentive.
To help you advertise your property to reach the right buyer, consider hiring a real estate showing agent. A real estate agent has access to investor databases that can help you locate potential buyers. Furthermore, real estate agents have expertise with advertising as well as house showing etiquette that will help you have a smoother and quicker sale.
Selling a property isn’t just about understanding the necessary steps; it’s also about making the most profit you can. By following the tips in this article, you’ll be able to get the most out of your property sale.
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