If you're thinking about selling rental property in Akron, OH, you're not alone. The city has become a hot spot for real estate investors in recent years, thanks to its relatively affordable home prices and solid fundamentals:
- Employment in Akron is increasing as the economy continues recovering from the pandemic (BLS).
- Home values in Akron have increased by about 80% over the last 5 years, with sellers turning accrued equity into cold, hard cash (Zillow).
- Rents in metropolitan Akron are increasing year over year, a pattern that every real estate buyer looks for (Zumper).
Given that renters occupy 45% of households in the city, it's no surprise that there is strong demand for rental properties in Akron from real estate investors who are always looking for new opportunities.
When selling your rental property, you may receive several qualified offers from investors looking to buy. However, before you go to market, it’s essential to understand all options for selling your rental property in the greater Akron area if you want a fast sale at a fair price.
Your options for selling rental property in Akron
Selling a rental property in Akron that is currently occupied by a tenant can be a tricky proposition. On the one hand, you may be able to sell the property for more than if it were vacant. On the other hand, you will need to deal with the hassle of finding a new place for your tenant to live. No matter which way you go, there are 2 things to keep in mind:
- Review the current lease to see if there is any way you can legally get the tenant to leave early. For example, the tenant may be consistently paying the rent late or not taking care of the property.
- Be aware of the Ohio landlord-tenant laws. These laws vary from state to state, so it's important that you understand them before taking any action.
When you own rental property, you have several options for selling it. You can sell it with the tenant in place, or you can try to find a way to get the tenant to leave early so that you can sell the property vacant.
1. Sell to your tenant
There are several advantages to selling the rental property to the existing tenant. It eliminates the need to list the property on the local multiple listing service (MLS), and can save a considerable amount of time and money. Plus, it allows the landlord to sell directly to a buyer who is already familiar with the property. This can help to simplify and speed up the sales process.
However, it's important to make sure that your tenant-buyer is prequalified for a mortgage before you agree to sell them the property. Additionally, using the correct purchase contract when selling the property will ensure that both the buyer and seller are protected in case of any unforeseen issues.
2. Pay the tenant to leave early
Cash for keys is a common option, where you offer the tenant a cash incentive in exchange for leaving the property in good condition and vacating on a set date. The exact amount will vary based on several factors, but as a general rule of thumb, you should expect to pay 1 to 2 months' rent.
There are a few advantages to this approach. First, it allows you to make any necessary repairs or upgrades to help maximize the sale price without having to work around the tenant's schedule. It also allows you to start marketing the property sooner, which could ultimately lead to a quicker sale.
3. Wait for the lease to expire
If you're trying to sell your house, but the tenant doesn't want to leave early, you may have to wait until the lease is up. This can be risky because market conditions could change in that time, making it harder to sell.
You also have to respect the tenant's rights by giving them property notice before showings, and there's always the risk that they may try to sabotage showings by not taking care of the home. So while it's certainly possible to wait until the lease expires before selling, it's not always the best decision.
4. Sell with the tenant in place
Many Akron property owners who sell their rental use an online listing platform like Roofstock. It's easy to sell your house with a tenant in place, which saves you time and money that would be spent trying to convince the tenant to leave:
- Continue collecting rental income until the day your deal closes to maximize your return on investment (ROI).
- Reach a more extensive, global network of qualified real estate investors on Roofstock rather than limiting yourself to the local MLS.
- Pay a competitive real estate commission, so you can keep more of your profit.
- By researching the Roofstock Marketplace, you can see what other rental properties in Akron are selling for and stay ahead of the competition.
What you should do before selling rental property
There are a few things you can do to prepare for a sale that will not only make the process easier, but may also help you get a better price for your property:
- Put together a buyer package. This package should include important documents such as a copy of the lease and tenant rent roll, financial reports such as a profit and loss (P&L) statement, a list of vendors and maintenance history, and a summary of all capital repairs and improvements done in the last few years.
- Perform a prelisting inspection. This inspection will identify any issues with the property that need to be addressed before putting it on the market. Addressing these issues ahead of time will show potential buyers that you are serious about selling a quality property.
- If you have tenants living in the rental property, it is important to explain to them that the property is for sale and how the transfer will work. Tenants may be concerned about having to move if the property is sold, so it is essential to reassure them that they will be protected under the law.
- Calculate potential capital gains tax and look into a 1031 tax-deferred exchange before listing your rental property for sale. A 1031 exchange allows investors to defer paying capital gains tax on the sale of an investment property by reinvesting the proceeds from the sale into another similar investment property anywhere in the U.S.
How to price your investment property for sale in Akron
When pricing your rental property for sale, you want to find the sweet spot between a competitive price per square foot and a price that will attract buyers looking for an excellent financial investment. Here are 3 key metrics that buyers will be looking at:
- Cap rate is a measure of the property's potential return on investment. To calculate it, you divide the NOI by the purchase price. A higher cap rate means a higher possible return on investment, so buyers may be willing to pay more for a property with a higher cap rate.
- Cash-on-cash return measures the property's ability to generate cash flow. Simply divide the annual pretax cash flow by the total amount of money invested in the property. Higher cash-on-cash return means more cash flow and a more attractive investment for buyers.
- After repair value (ARV) is the property's estimated market value after repairs and renovations have been completed. A higher ARV means there is more potential upside for buyers, making the property more attractive.
By understanding these key metrics, you can price your property for a fast sale at a great price. To get started, get a free price estimate and consultation for your property.