Thinking About Selling Your Rental Property? 5 Things to Consider Before You Do

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The real estate market is hot right now. And you might be tempted to sell one of your rental properties, hoping to infuse your portfolio with additional funds. But to capitalize on any capital gains and get top dollar for your rental, there are a few things you can do. Before you contact a realtor or put a “for sale” sign in the yard, make sure these checklist boxes are checked.

1. Notifying Current Tenants

Before you sell your rental property, consider any current tenants first. Maybe your renters want to buy the property from you, so it’s a worthwhile conversation. And yes, you can move to sell the property with residents in place. There can be a few additional accommodations, especially when showing or advertising a property with tenants. And you’ll want to refer to any renter rights within your lease before doing anything. There may also be local mandates regarding timelines to notify tenants of a potential property sale and how to handle any necessary evictions. Once you’re confident your renters’ rights are protected, you can move forward with selling the property. And it may be an advantage to have great tenants in place.

2. Preparing a Vacant Rental Property

Selling a rental property that happens to be vacant is a pretty cut and dry endeavor. You’ll want to prepare your space for clean showings. Invest in the time to take quality, fresh photos if you plan to list the property yourself. But a real estate professional can help you with listing and marketing, as well.

3. Leveraging Tax Deductible Upgrades Before You Sell

Before anyone lists a home or rental property for sale, the industry experts will suggest making repairs and upgrades. Consider having an inspector or real estate professional help you carve out a list of must-fix maintenance issues first. And improving the condition of the structure or space will only help you market and sell the property. The best part is knowing these can be tax-deductible improvements, only adding to your bottom line.

4. Tap into the 1031 Exchange

The 1031 exchange may be especially helpful to you in selling your rental property. It allows for a delay in payment of the capital gains taxes, both short and long-term. Also known as the “like-kind” exchange, this deferral is available to anyone reinvesting proceeds in a new property, along with other considerations. These capital gains tax amounts can be sizable, depending on the profit margins you get from the sale. And the tax amounts will also vary in conjunction with your income levels. In most cases, sellers can expect to owe anywhere from 15-20% in federal capital gains taxes. The 1031 exchange may help you navigate these waters. Connect with your accounting professional for more precise financial guidance.

5. Partner with a Rental Property Professional

Before you sell or make any changes to your rental property portfolio, consider partnering with a professional like PMI JCM Realty Group. Whether you’re buying or selling, growing or downsizing, you’ll want someone with an investment perspective to help you maximize your ROI potential. Partnering with us means having a keen eye for often-overlooked details with each transaction and sound, strategic advice for every step of your ownership journey.

When you’re ready to sell, or are just thinking about selling, contact us!

It’s our ongoing intention to keep you up to date with the latest trends here in the Tampa Metro area real estate and rental property market. If this topic is helpful and you’d like to learn more, sign up for our free webinar. Explore How to Streamline Your Rental Portfolio for Maximum Growth! It’s a hot topic for every investor right now!

You can also join our Facebook group to connect with other rental property owners interested in ROI success. Exchange fresh ideas and address common challenges with other savvy property professionals. And should you have more precise questions that deserve a tailored response, schedule a meeting on my calendar, and let’s connect!