There are a lot of reasons why owners decide to sell their rental properties, with time commitment being one of the biggest reasons. If you aren’t prepared to sell or don’t take the right steps, you may actually find that trying to get your property off the market can be just as challenging as managing it was! Aren’t sure where to start? Here are five things to think about before selling your investment property.
Tip #1: Know Your Potential Buyers
Understand the difference between homeowner-quality and rental-quality homes. Most investors won’t need the extra improvements you might consider to sell a home. A rental property should be clean and relatively up to date, but pricier touches like granite countertops or updated bathrooms are unlikely to provide any kind of return on investment when you sell.
Tip #2: Justify the Rent
When selling your rental property, you should be able to justify your rental income to your next buyer by projecting the income over a 10-year period. To be conservative, you might want to project rent growth at 3 percent because this is consistent with the inflation rate. You also have to remember to project expense growth as well. Sound confusing? Don’t worry, our team can help you with this!
Tip #3: Keep Your Tenant In Place
If your prospective buyer is a real estate investor, then consider keeping your tenant. By selling an occupied rental property, you continue to collect rental income through closing, and rental property investors will acquire an occupied home that cash flows from day one. The tenants will also get to stay where they are with minimal disruption. It’s a less stressful situation for all three parties.
Tip #4: Open Houses are Important
Selling a rental property has more to do with the sum of all the parts as opposed to just one strategy. Hosting an Open House is one proven strategy to make a successful sale. Open houses are a great way to generate traffic. Combined with a competitive price point, a good open house can also create a sense of demand that pits potential buyers against each other but in your favor.
Tip #5: Team up with a Real Estate Professional!
It may be tempting to sell the property on your own, but it’s very risky. You need to be experienced with a comparative market analysis and to determine an accurate estimate of value. You also need to familiarize yourself with the contracts and requirements of getting a deal to the closing table. If you’re not well-equipped with these, your property may languish on the market with little interest. It can also cause a significant price drop and result in an opportunity lost. If you are getting ready to sell your investment property, please give my team a call!
If you need help preparing your investment property to put it on the market, or you’re ready to list today, contact me today! I’d love to hear from you.