Selling a home can be complicated, and when it's a rental there may be more challenges. Whether you are selling your rental because you would like to cash in on the profit or because you are tired of being a landlord, there are steps that you will need to take to get the job done right. If your rental is occupied by a tenant at the time that you want to sell, consider their situation, too.
For Sale By Owner
Give the tenant notice in order to enter and inspect the house. Each state has its own laws regarding access to a tenant-occupied property. Even if the lease expires soon and the tenant will be moving, it's important to determine as soon as possible how much money and time it will take to make the house ready to list.
Explain your situation to the tenants. Talking to them about why you will be selling may make them more amenable to cleaning up and showing the home.
Clean the exterior of the property. Patch yellow or dead grass and trim trees and shrubs. Paint the front door, if it is fading, and the trim. Paint the interior, if needed, and clean the carpets, if they are not being replaced.
Ensure that all major systems in the house are in working order, such as the heating, air conditioning and plumbing. Repair all broken or damaged items, such as cabinetry, window screens and flooring. If the tenant is responsible for some or all of any damage, deduct from the security deposit and use the money to make repairs.
Know the current value of the property. Check with real estate agents in your area to see how much other houses like yours have sold for. Price your property according to the latest sale prices of those most comparable in your neighborhood.
Ask your current tenants if they are interested and able to purchase the property. If so, place them in contact with a mortgage broker to determine if they qualify, and hire a real estate attorney to write the contract. Take the purchase agreement to a title or escrow office to complete the sale.
Offer your tenants or other buyers owner-financing of the property if it is paid off. If it is not paid for, but you have substantial equity in the house, you may offer buyers the option of your carrying a second loan if they do not have a sufficient down payment. Contact loan servicing companies, such as Investor Loan Services, to choose one that may help you with billing and payments. (see the Resources section).
List your property on websites that target other investors, such as LoopNet.com. Post pictures of the exterior and interior of the property and list all details, such as year built, number of bedrooms and baths, square footage, location and rental rate.
Call several real estate agents, if you are not selling your house yourself, to discuss how much it should be listed for and how it will be marketed through their brokerages. Choose the agent who has the most experience in your area and will market your property aggressively. Ask for references from neighbors or other investors, if needed. Alternatively, you can get a flat-fee listing on the MLS and save on agent commissions.
Offer the tenants a reward for showing the home. Tell them that, if the home is kept clean and presentable, you'll credit them a certain amount on their next month's rent or at the close of the sale; $10 to $100 is reasonable.
Give the tenants 30 days' notice to move, once the home is under contract, if they are on a month-to-month lease. Check the house after move-out to ensure that it will pass inspection for the sale to close.
If your house is occupied by a tenant under a long-term lease, consult your state property code or an attorney about the steps required to end the lease. Depending on the laws in your state, you may need to sell to another investor, who will honor the remainder of the lease.
There may be tax implications in selling a rental property. Talk to an accountant before you list your house for sale.
Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.