What to Consider When Selling a Rental Property
For whatever reason, you have decided to sell your rental property.
While this may be a sound business decision, you have a lot to consider before you begin the process or sign the final closing papers.
Do it right, and you won’t have any regrets.
Informing Your Tenants
If your property is occupied, you will have to inform your tenants at some point. In multifamily units, it may not be a big deal.
Chances are pretty good your buyer will continue to maintain the property in the same way and keep the same tenants as long as they are current on their rent.
Things could be much different in a single-family dwelling where the buyers could want the home for themselves.
In this instance, you have to give your tenants an appropriate amount of notice.
A side benefit is that your tenants may be interested in buying.
If you can offer incentives, such as paying part of the closing costs, you may discover a buyer.
Otherwise, you may need to provide 60 days’ notice to be fair, even if the law in your state only requires 30 days.
Showing the Property
To sell the property, you will have to show it to prospective buyers — another good reason to let your tenants know. You need to find out what times are convenient for them and plan appointments during those times.
Unlike homeowners trying to sell their own property, your tenants may not be as cooperative because it doesn’t benefit them for you to sell.
One way around this problem is to offer them an incentive.
Perhaps you offer to deduct an amount from their rent in return for allowing a certain number of showings per month.
Include one or two open houses in the deal, and you are more likely to get full cooperation if they agree.
Make the deal even sweeter by providing an added discount if they find the buyer.
This puts both of you on the same team.
Realtor or FSBO?
You will also have to decide whether to hire a Realtor or sell the property on your own as a For Sale By Owner.
While hiring a real estate agent puts another person in the mix, it can also result in your property selling faster and for more money.
The key is to hire someone knowledgeable about investment properties.
A real estate agent should know the legal details of selling an investment property.
However, you should also talk with your lender about any ramifications of selling your rental and find out if there are any prepayment penalties or other concerns.
While many home sellers use an attorney when selling their homes, it is essential for a property owner selling a rental.
Landlord and tenant laws vary by state, and you should find an attorney experienced in rental matters to ensure you don’t break any laws and end up being sued.
Selling a rental property is a major decision.
You have to consider the tenants and all the legal issues that can result.
The best way to navigate through this process if this is your first time is by working with an experience agent and lender to help you make the right choices as you sell your property.
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