Selling a Rental Property

Posted May 6, 2024.

Owning a Rental Property

Being a landlord in Pasadena can be one of the most stable and trustworthy financial investment a person can make, with both short and long-term earning potentials.

The passive income received from your rental properties can supplement your regular paycheck and increase substantially towards your overall wealth. And owning real estate, regardless if it producing rental income or not, is a strong, viable asset.

However, managing income producing properties can get quite costly and trying at times, especially if your rental is located in expensive cities such as Pasadena.

For one, the California landlord laws favor the renters, making it difficult when dealing with unreliable tenants. And with the rent control ordinances in many California cities limiting rent increases, it can result in a loss of positive cash flow. Also, collecting rents, dealing with vacancies, haggling with tenants, and property upkeep and repairs can be very stressful.

Other situations with managing rental properties may create negative scenarios for landlords to consider. Things happen…. medical bills, debts, relocating out of town, even the rising costs of property taxes can make it challenging to hold onto the property.

When is a good time to sell a Rental Property?

If you are losing money every month, you may want to reexamine your situation. Rents might have dropped, and the cost of utilities, insurance and property taxes may have inflated. Or perhaps properly maintaining a rental property has just become too costly. Besides making sure the property is properly habitable for the tenants, there are health codes and regulations to follow. So, it may have just become a numbers game; are you spending more than you are earning?

However, not all motives to sell your rental properties are negative. If the area your property is located is currently in a hot real estate market, it may be a good time to take advantage of the surging home prices for a significant profit. When a housing supply is low and the demand high, these times can be beneficial for both the seller and possible buyer. With low housing supply and less competition, the property should sell at the highest possible price. And with high demand for housing, this also means more potential renters available; a good selling tool.

And it may also be a good time to take advantage of low interest rates and favorable mortgage lending terms. At the same time, selling your rental property can also be twofold. Low interest rates often create much demand, since buyers will be wanting to take advantage of the low rate. Which means you should be able to sell your rental for a nice profit, but there also may be difficulty if you are looking to purchase another property as the demand is high.

How to sell a Rental Property?

Selling your rental property for a fair price and in a timely manner may not be so easy. Regardless of who buys the property or how it is sold, if tenants are involved it may not go a smoothly as hoped for. California rental laws demand at least a 24-hour notice before entering to inspect the unit. And when there are several prospective buyers interested in purchasing the property, scheduling these appointments with disinterested tenants can be quite monotonous. Especially when the property has multiple units complicating the showings.

Options in selling a Rental Property

Usually when selling a property, the most efficient and quickest way to sell is by hiring a real estate agent to represent you. With an agent, they will advise you have to make your rental more attractive to potential buyers so you can usually expect to have your property widely marketed for multiple and competitive offers. So, if they suggest some renovations or upgrading of the property, it may be in your best interest in following their advice to improve the property for a quick sale.

Unfortunately, though, that’s when hiring an agent to sell a rental property may get quite expensive. After spending money for remodeling of the property, you will have to pay a hefty real estate fee to your agent. California real estate commissions rates are amongst some of the highest in the nation, averaging about 6% of the sales price, and possible costing tens of thousands of dollars in additional fees. So perhaps is might be more financially beneficial to selling your property ‘for sale by owner’ (FSBO).

However, selling for sale by owner, you may not save the money you hope for by not hiring a realtor. The task of a real estate agent will now become your burden. Advertising and marketing your property, finding the prospective buyers, scheduling and showing the units, and negotiating the sales price all part of the agent’s job, and now becomes your chore. And without an agent, you property will not be available to website exclusively provided to other realtors, limiting the exposure to other buyers and agents. So, your rental property’s sale could drag on for months without even an offer. And ever if a buyer does show interest, if they are represented by a real estate agent, as the seller, you still are obligated in paying their 3% commission fee.

Another option when selling a rental property is to sell it to an “all cash buyer”. The quickest way to sell a rental property is to find a motivated real estate investor. A qualified investor can make you a cash offer and buy the property in “as is” condition, without any required repairs to the property. If time constraints or lack of funds are an issue, selling to a real estate investor for cash can be a quick and painless solution.

At Duality Investments, base here in Pasadena, California, we but rental properties fast, and directly from landlords, quickly in as few as seven days. And we will buy your rental property with or without tenants, so giving you a smooth and easy transition.

If you are looking for quick, easy cash for your rental home, or just want to inquire about our services, please contact us at webuyhousesfastsocal.com, or call us at 818 573-0860. We could be the perfect fit for selling your rental property. We are here to help!

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For personalized advice, consider consulting a tax professional or a real estate attorney who can provide specific guidance based on your situation.

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