How To Sell Your Rental Property Quickly
Owning a rental property is a great way to make a passive income. This being said, rentals are fantastic until they’re not. If you’ve seen the writing on the wall and believe it’s time to move on, then you’ll be wanting to sell quickly. But what are these signs?
When should I sell my rental property?
There are many reasons to sell your rental property investment. For instance, if it is a seller’s market, where real estate conditions favor you.
The property has seen significant appreciation since you purchased it. This is normally for those who’ve bought a home years ago, which has needed little to no work. When the market is high you should always make a plan to cash in. As no one can predict when the market will dip.
A good time to consider selling is when the rental market has bottomed out. The reasons for this occurring can be numerous, such as an influx of new construction projects and more rental options in the area.
One of the major reasons to say to a realtor, “Sell my house fast!” is when the home needs major repairs.
If your investment needs major repairs it’s actually a financial burden. These jobs can include general repair work or if you need to upgrade aging appliances.
For those who have a homeowners association (HOA), you can be due some major upgrades to the curb side appeal of the home. Like replacing the roof.
And if your property has a low cap rate, this is also a persuasive reason to sell. Most property investors use this indicator to show them how their investment is performing. But what is a cap rate and how do you calculate it?
How to calculate a cap rate
A cap rate is your net operating income (AKA gross rental income minus the expenses) divided by your purchase price.
This calculation should be done on an annual basis. Your gross income is the total of all the income you get from your occupants. Operating expenses include items such as insurance, taxes, maintenance, and property management fees.
Here is a basic example:
Purchase price was $100,000
Gross annual rental is $12,000
Subtract your annual expenses which are $5,000
This will give you a gross profit of $7,000 for the year.
When you divide this by the purchase price you get a cap rate of 7%
The higher your cap rate the better your investment property is performing. Bear in mind this percentage can fluctuate over time. But if the trend is low, it might be time to sell.
But if you are looking at buying an investment property, or investing in rental properties, working out the cap rate is a great tool to decide whether “the juice is worth the squeeze” so to speak.
Right now though, you took the plunge, by buying your first rental property. But now it’s time to sell. What are the pros and cons of selling your house fast?
Positives of selling your rental property quickly
There is one major benefit of selling your rental fast - but it takes some explanation.
Rolling over your investments into another opportunity
Getting blindsided by hefty capital gains taxes can happen in an instant when selling. If you have lived in the residence as your main adobe you can deduct some tax, generally $250,000 (if single) and $500,000 (if married) profit without owing taxes on the sale. The minimum stay limit is that you’ve lived in it for two of the past five years.
This being said, as an investor you’re out of luck and the IRS won’t extend this olive branch. In most cases when purchasing rental properties you’ll see again in the property’s value over time. So, you will be liable to pay taxes even if it sells under the $250,000 cap.
Now, to throw a spanner in the works, there are two different types of taxes to know about as an investor.
Short-term capital gains: if you’ve owned the rental property for just one year or less, you will be taxed at the same rate as your income. Depending on your tax bracket, you could owe anywhere from 10% to 37% per tax code.
Long-term capital gains: if you’ve owned it longer than a year, you are liable for less to the IRS, with 15% for joint filers earning between $78,750 and $488,850, or 20% for filers earning more than $488,851. If you earn less than $80,000, you are off the hook from paying capital gains tax.
But there’s a way to work around paying taxes altogether: 1031 Exchange.
A 1031 can’t be used if you are purchasing a personal residential home. But you can buy a “like-kind” property with the potential to generate more capital. So, if you’re planning on avoiding taxes, you need to keep buying rental or investment property.
You have a window of 45 days to locate up to three properties that you’re interested in purchasing, and a total of 180 days to close the deal on the chosen properties. In essence, you are swapping one investment for another.
Now that you can do a 1031 you are able to put your investment capital into a new real estate venture and expand your portfolio.
Being able to diversify the type of properties you own means you’re able to also build a robust portfolio.
Now that we’ve covered the pros, what are the cons of selling a rental property quickly?
Disadvantages of selling your rental property quickly
When selling your rental property quickly you need to beware of the downsides. Namely:
Markets are lower
If you’ve purchased your property in a buyer’s market it might take a turn downwards. This means you’ll be out of pocket the differences between what you paid and what it is worth now.
This issue is then compounded by the fact that you’ll be liable for capital gains taxes.
No profits from rent
One of the biggest drawcards to purchasing an investment property is being able to cash in on passive income. When you sell your rental property quickly you don’t get to reap the rewards.
These effects then domino as you’re unable to pay off your mortgage if you have one on the investment.
Repairs take time
As any who’s gone through any renovation work on their property can attest to, construction work takes time. Being able to improve your investment with some repair work is a huge opportunity that can be missed if you sell quickly.
Now that we’ve gone through the pros and cons, let’s investigate how to sell your rental property quickly.
How to sell a rental property quickly
So, you’re interested in playing your 1031 card, which means you have 180 days to complete a complex process. This all starts with being able to sell your property fast. There are a number of steps you can take, namely:
Pay your tenants to leave
If you’re locked in with a fixed-term lease contract, you can still negotiate a buyout deal with your tenants. This would require you to make the moving process as easy as possible by covering certain costs. Such as:
Moving costs
Rent differences
Covering their new security deposit
And maybe a share of the profit from the sale
This can be tricky to negotiate, but there are more options.
Sell to your tenant
Sometimes the solution is right in front of you, in this case, sell the property to your tenants. If they agree, you’ll be navigating around the need of hiring a real estate agent. And if the tenants can’t afford the home you can sell it to them as a financed deal, where they pay it off in regular installments. This is normally only a short-term option until the tenants can secure a mortgage.
But if they’re not interested in taking on the deal and want to stay put you can always select the next option.
Sell with an active lease
Nothing is more attractive to a potential investor than a property already generating a profit with a good tenant.
Selling a property with an active lease means the new buyer will allow the tenants to live in the property for the rest of the lease agreement. After the lease has ended, the new owner can decide what to do. But if it is a good tenant, they’ll most likely ask them to stay on.
But what if you’re ready to unload your investment property now, and have been struggling to sell it in the current market? Well, there’s always House Buyers of America.
Who are House Buyers of America?
Since 2001, House Buyers of America has bought and sold homes in Maryland, Virginia, and Washington DC. During this time we’ve innovated the real estate game, as well as impressed thousands of customers.
We’ve perfected how to buy rental properties, as we have been in the industry for decades.
It’s this longevity and success that sets us apart from other companies that will buy your house.
We have hundreds of references about how good our services have been. Also, with our experience, we know exactly how to buy investment properties and can assist with every step of the process.
If you’re still asking, “How to buy rental property”, or “How to buy investment property” our real estate consultants can help.
After all, when it comes to Maryland, Washington DC, and Virginia home buyers, we’re the best. Also, we’re been in the real estate investing business in Virginia, Maryland, and Washington, DC longer than anyone else.
But how does House Buyers of America work? How do we answer your pleas of, “Sell my house - please!”
How House Buyers of America works
We’ve ensured that every step is simple, quick, and efficient. That’s why our first step is you approaching us.
Simply give us a call at 855-659-3289 or use our online form to get started!
Within 10 minutes, if the call is made during office hours, we will have a fair cash offer for your property.
Once we’ve gathered your information, we will arrange a time for us to come by your investment property to finalize that important paperwork.
And once you’ve signed on the dotted line, the money will be in your bank account in a matter of days.
It’s never been easier to sell your rental property quickly than calling us.
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We make it possible for you to: Move forward with your life in a matter of days (not months or a year) Sell your home without cleaning or renovating Save money by avoiding commission fees and closing costs Walk away with cash in your pocket Why Sell Your House to House Buyers of America? In business since 2001, thousands of homes purchased We close on time You never pay any commissions (yep, none!) We work with your schedule If you sell your house to us, you have no worries, no commissions, and no delays. Why deal with the headache of staging a home, scheduling open houses and maintaining listings? Contact us now to sell your house fast and save time and money. We have bought thousands of homes since 2001. When you sell your house to us, you are dealing with a local, established company. You can visit our office and talk with us any time if you have questions or concerns. We even provide you with a real estate consultant to help you through every step of the process. 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Cities and Counties in Maryland Where We Buy Houses Aberdeen Adelphi Annapolis Baltimore Bel-Air Beltsville Bowie Burtonsville Bushwood Catonsville Chesapeake Beach Chevy Chase Chillum Clinton Colesville College Park Columbia Crofton Darnestown Edgewater Eldersburg Elkton Essex Fells Point Fort Washington Frederick Gaithersburg Glen Burnie Greenbelt Gwynn Oak Halethorpe Havre De Grace Hyattsville Indian Head Lanham Leonardtown Lexington Park Lochearn Marlow Heights Mechanicsville Milford Mill Monkton Monrovia Montgomery County Mount Rainier Nanjemoy Olney Oxon Hill Pikesville Potomac Prince George's County Randallstown Rockville Rosedale Walkersville West River White Plains And more! We’ve worked hard to establish the best platform for quickly selling your home in Maryland. With our “We Buy Maryland Houses” program, you can quickly get your home off your hands, all for a very fair price. We’d love to chat more about finding ways to sell your Maryland property and help you achieve your long-term financial goals. Why You Should Use House Buyers of America Selling a house is stressful enough, even if you live in a very competitive state for housing like Maryland. When you add in the trials of trying to sell your house during a personal financial emergency or the emotions of an estate sale, it can be overwhelming. Let House Buyers of America buy your house; as suggested, we buy houses in Maryland and we put a lot of pride into our work. Here are just a few ways House Buyers of America can make a real difference: No Commission Yes, you read that right. House Buyers of America takes no commission when buying your home. This frees up at least 6% in the value of your home, significant savings that you can apply to your next home. With Maryland’s high real estate values, that means you could potentially save tens of thousands of dollars. With no commissions, you can be assured that you get a fair price for your home. Related: Three Tips to Sell Your House Fast for Cash Fast House Buying House Buyers of America promises to get you an offer within 10 minutes over the phone. It doesn’t matter if you are trying to sell a home in Maryland, Virginia, D.C., or any of our other markets. That means no more waiting on real estate agents to list your home and then receiving an offer from a potential buyer in weeks or months. Close in as Little as 7 Days Some companies will tell you “We buy Maryland houses in 7 days,” but they don’t have adequate capital or a fully staffed office to accomplish this. House Buyers of America’s goal is to buy houses in Maryland in as little as 7 days because we try hard to ensure we buy it as quickly as possible. We have plenty of capital—enough to buy many more houses than we’re buying now. Plus, we have a fully staffed office ready to handle any new deals. Our commitment to a speedy sale is a hallmark of House Buyers of America. Any Condition, AS IS This is not a gimmick. We buy houses AS IS in Maryland, in any condition—from a tear-down to relatively new houses. Whether it needs tons of repairs or no repairs at all, our purchases are not made based on the condition of the home. Our offers are made in cash for any condition and on an AS IS basis. When Should You Use House Buyers of America? Clients of House Buyers of America range across demographics, ages, and financial situations. We help make it possible for Maryland homeowners to achieve their financial dreams. As a result, there are certain reasons why our customers tell us why they sell their houses to us. Job Transfer Did you just get a promotion that requires you to relocate? Or maybe your local office is closing down and you have to relocate to another city quickly in order to keep your job. Whatever your job transfer needs are, we offer cash for your home and we can close quickly. Buying a New House Perhaps the thought of juggling the sale of your current home and purchasing a new one at the same time in the same local market might be creating a lot of stress. Have you considered having to have your home staged and then factor in coordinating where to live after you sell? What should you do? Put a home sale contingency in an offer to purchase a new house and risk making your offer much less competitive. Or should you buy a house first and then risk not being able to sell your current house, leaving you stuck with two mortgages? This is the age-old real estate dilemma. If you’re in this situation, you’ve come to the right place! With House Buyers of America, you get a guaranteed sale of your house and we’re flexible on the closing date (and no closing costs). After the purchase agreement is signed, your home sale is covered and you can start looking for a new home without worrying about selling your existing home. Divorce Divorce can be a huge disruptor, emotionally and financially. In most cases, the divorced couple needs to sell their house fast so they can divvy up the assets and make a clean break. Many in a divorce situation look for a “sell my house fast Maryland” company so they can sell their house without having to go through the arduous process of a traditional sale. Finding a real estate agent, renovating, cleaning, and staging the house, agreeing on a list price, negotiating the terms of the contract, etc. This is normally a stressful enough task, but if you add divorce into the mix, it feels impossible. Why not pick up the phone and get an offer in 10 minutes? Or simply fill out our online form and get an offer quickly. No need to renovate, stage, select a Realtor, and deal with people traipsing through your house and losing all of your privacy for 6-12 months. Real solutions are well within reach. There is an alternative: House Buyers of America! Financial Distress Are you in a financial bind with thousands of dollars locked away in your home? Most people do not realize they can directly access the accumulated equity of their home in their hands in as little as 7 days until they contact House Buyers of America. We offer fair prices for when you need an immediate cash infusion to stave off foreclosure, bankruptcy, or whatever life throws at you. Medical Emergency, Retired, Downsizing Some of our clients are elderly and have stayed in their homes for years, but have stumbled into a medical emergency and need the equity in their homes to pay for hospital bills. When this is the case, whether you are a homeowner or a care provider, you might need to sell your Maryland home quite quickly. Others simply want a hassle-free solution for downsizing into a smaller home and want equity in their legacy home. Estate Sales House Buyers of America have also helped thousands of people who have suddenly inherited an unwanted or unneeded property. When dealing with an estate, many heirs can’t decide or agree on when to sell the house or who will take care of the paperwork, so the house is left sitting vacant and deteriorating for months or years. Estate sales can bring out the worst in people and families often get torn apart in the process. The traditional real estate process can be complicated and often doesn’t work well for estate sales. The unique estate laws that apply in Maryland can also create some additional complications. So why not try a simple, fast, and hassle-free solution that all of your family members can agree on? Get an all-cash offer in as little as 10 minutes by contacting House Buyers of America. A Fresh Start We’ve talked about several reasons you might want to sell your Maryland house to a cash buyer. Then there are those unfortunate circumstances in life that require a complete and total liquidation of your assets when you need a speedy exit from your current home and town. By getting an all-cash, guaranteed offer from House Buyers of America and getting your house sold in as little as 7 days, you get that fresh start without waiting. That’s why we continue to be the choice of people looking to “sell house fast in Maryland,” as well as other nearby states.