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Sell Rental Property in Dallas, TX

Posted on: April 23rd, 2018 by , No Comments

If you try to sell rental property you may notice it getting a bit more cumbersome. When and how to sell rental property is just one of many questions to figure out.  Prices are breaking record highs, yet to sell a house is a daunting task for most homeowners.

Among things that need to be done are listing, updating, advertising as well as properly staging your home costs both time and money.  For those with tons of stuff they will need to rent out storage and move all the clutter and then hiring realtors can slow your move-out time exponentially. This is all an added hassle and pain to selling an income property? Believe it or not, to sell rental property in Dallas Fort Worth, TX can be a little more convenient and does not have to be a difficult task.

 

Sell Rental Property: Choose the Right way/Time

To sell rental property in Dallas Fort Worth, TX is all about timing.

Determining the right time to sell your rental property means considering a multitude of factors. Selling a Dallas Fort Worth house is not only more complicated than purchasing, it also requires more risk. According to some experienced in home-selling, “choosing the right time to sell a rental property may be more crucial to your success… then your initial decision to purchase it.” With that in mind, consider these factors when needing to sell rental property in Dallas Fort Worth, TX.

Before selling, evaluate the current state of your rental. Rental properties are notorious for being hard to manage, even with an attentive and well-meaning landlord. Whether it’s a lack of cooperative tenants or the inability to foresee the emergence of major repairs, a rental property can fall into a state of disrepair fast. Needing major repairs without having access to the home or funds set aside for them can create a massive financial loss that’s unappealing to most rental property owners. It may be time to sell.

office table with white chair and wooden floors. Selling Rental Property in Dallas Fort Worth,TX

Does your property generate a negative cash flow? Does it cost more to own and maintain than the income it produces? Even rental properties with the highest rent in the best neighborhood can be too costly to keep.

Owning the ideal rental property in Dallas Fort Worth, TX means paying for property upkeep, taxes, utilities, insurance, among other monthly expenses. Your renters are paying for residence in the best area, but you’re paying more for maintenance and management. After expenses, is the bottom number adequate, or can you yield more revenue in other investment opportunities?

Like most markets, the renter’s market is fickle. A good year for rental property owners can mean increased appreciation and profit. But a market downturn can hemorrhage your savings. A once profitable piece of property can become an anxiety-inducing nightmare. Consider your long and short-term goals. If you envision your investment as more of a financial liability than a guarantee, it’s time to consider to sell a rental property in Dallas Fort Worth, TX.

How to Sell a rental property with a Tenant

So you’ve decided to cut your losses and sell your rental property. Now, what? If you have current tenants, you might be wondering about the complications to sell your rental property with tenants.

Rooftops selling rental property

Even if your tenant is one of those rare, dream tenants – they’re tidy, never call after hours, and care for your property like it’s their own – to sell your rental with a pre-existing tenant is more of a hassle than selling an empty home. “If you want to sell your house with a tenant for the highest and best price, even the best tenant can be a detriment,” warns realtor Bill Petrey. This is partly due to a tenant’s lack of incentive to keep the property in showroom condition to impress and woo home buyers.

Having a tenant is also a deterrent for many potential buyers. Like it or not, when you are ready to sell rental property with tenants you are selling the property with tenants lease. You reduce the pool of potential buyers. Some home buyers can wait until a tenant’s lease is expired to move, and will buy your property without worry. But most want homes that are move-in ready the day of closing. Unless you’re trying to attract landlord buyers and other investors, selling a home with a pre-existing tenant can be limiting.

The upside to sell rental property with tenants. You can combat the complication by enlisting your tenant’s help with showing your property to potential buyers!

By communicating with your tenant, you gain the possibility of making them more amenable to showing your home, an inconvenience no one likes during the selling process.

Some rental property owners even offer tenants a reward for keeping the home in peak condition. These rewards can include lowering their monthly rent or giving them gift cards to spend the day of a showing. “The success of dealing with a tenant during a sale is less about the message itself, but in how the message is delivered,” explains Zillow’s Brendon Desimone.

Selling tenant-occupied property can be tricky, but it’s certainly not impossible. While some buyers avoid tenants, others flock to the chance at owning a rental property that produces consistent  income day of sale. If you can offer your tenant an incentive for the inconvenience of showing your property and helping with the upkeep, you’ll generate more potential buyers. More buyers mean more bidding, and more bidding means procuring top dollar when trying to  sell a rental property in Dallas Fort Worth, TX.

 

Selling at a Loss

When selling a rental property, it’s smart to consider the taxes imposed on your capital investment. It might be the least of your worries, but you must pay tax on any profit you earn while investing.

If you’re selling while the market is favorable, your overall equity has increased, or you’ve lacked any major vacancies since renting your property, expect to pay a capital gains tax. The tax signifies your rental property’s ability to earn a positive cash flow and is considered a positive consequence of selling.

But what about the possibility to sell rental property at a loss? Although very few investors buy property to lose money, it happens quite often. It’s one of the major risks of real estate. It can happen for any number of reasons, including a property-specific problem or the market losing equity.

Selling at a loss means the property drops in value causing you to lose money when selling. No one wants to sell at a loss, but sometimes it’s inevitable. It doesn’t have to be a negative consequence of selling, though.

According to Turbo Tax, If you owned your property more than a year, you can file for a Section 1231 loss. This specific loss can be used to reduce any type of positive income you’ve accrued. If your Section 1231 loss is large enough and it reduces all other income below zero, you obtain a Net Operating Loss (NOL). While taking a huge financial loss is generally considered bad, it can be a blessing for tax purposes. An NOL can be carried back for at least two years, offsetting taxable income and allowing you to regain the taxes you paid those previous years. An NOL can also be applied to future tax years and counter net gains for up to twenty years!

 

To Sell rental property at a loss is a short-term loss, but it offers long term gain. If you purchased your rental property with a mortgage, you’re able to pay off your mortgage with a short-sale, even with an overall loss. If you own the property outright, you can take the loss but garner great tax benefits that last well after your close. Yet at times to sell rental property at a loss may be a solution to selling your investment, but can be a strategic choice to invest in future properties.

It is important to understand to sell rental property in Dallas Fort Worth, TX can be stress-free when considering all the factors before closing. Is it the right time to sell? Do you need to sell with tenants? What are the tax benefits to selling? If you can answer these questions with assurance, selling your rental can be an easy decision with multiple benefits.

Get a Cash Offer For Your Rental Property

Interested in a faster option? Turbo Buys Houses can make you a no-obligation cash offer within 24 hours to buy your rental property in Dallas Fort Worth, TX.

If you want to find out more, do not hesitate to call us directly at 469-666-7128. We looking forward to talking with you.

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