If you're thinking of selling your rental property in Cleveland, now might be a good time to do it. The city's real estate market is strong right now, and there are plenty of buyers looking for properties:
- Median household incomes and property values are both rising in Cleveland (Data USA).
- Home values in Cleveland have more than doubled over the last 5 years, creating an opportunity for sellers to turn accrued equity into cash (Zillow).
- Rents in metropolitan Cleveland increased by double digits year over year, a statistic that every real estate investor looks for (Zumper).
Cleveland has many characteristics that make it a good market for selling your rental property, so you may get multiple offers when you list it. However, before you go to market, understand all of the options for selling your rental property in the greater Cleveland area if you want a fast sale at a good price.
Your options for selling rental property in Cleveland
Selling a rental property that is currently occupied by a tenant has its own set of unique advantages and disadvantages. However, sometimes landlords try to get the tenant to leave before the lease is up without considering all of the alternatives. Before taking any action, do your research on 2 key topics:
- Review your current lease to understand your rights and the tenant’s rights.
- Familiarize yourself with Ohio’s landlord-tenant laws.
The next step is to decide on the best option for selling your rental property in Cleveland. Some possibilities include:
1. Sell to your tenant
If you want to sell your rental property in Cleveland, one option is to sell it to your tenant. This can be a good option if they've been renting for a while and are interested in buying, and will save you the time and trouble of listing on the multiple listing service (MLS).
When you sell your rental property to your tenant, it's important to take a few key steps to protect yourself and ensure a smooth transaction. Make sure your tenant gets preapproved for a mortgage right away. This will help avoid any last-minute financing issues that could derail the sale. Also, be sure to use the correct real estate contract for selling a home in Ohio. This will ensure that both you and your tenant-buyer are protected throughout the process.
2. Pay the tenant to leave early
Cash for keys can be used as an incentive to get your tenant to leave before the lease ends. Cash for keys is when you offer a tenant money in exchange for them returning the keys to the property and vacating the premises.
There are a few things to consider before offering cash for keys to your tenant. First, you'll need to make sure that the lease and local real estate laws allow for this type of incentive. Second, you'll need to determine how much money to offer. And finally, you'll need to have a plan in place for what to do if the tenant doesn't take you up on your offer.
3. Wait for the lease to expire
Selling a rental property in Cleveland can be a challenge, especially if you have tenants who are currently living in the unit. However, there are some things you can do to make the process as smooth as possible for both you and your tenant.
It's important to give your tenant as much notice as possible that you will be selling the property. This gives them time to make other arrangements if they need to move. You should also work with your tenant to schedule showings of the unit. This can be tricky, but it's important to be respectful of your tenant's privacy and schedules.
4. Sell with the tenant in place
Roofstock is an online listing platform that many property owners in Cleveland use to sell their rental properties. With a tenant already in place, selling your house through Roofstock is easy and can save you the time and money that would be spent trying to convince the tenant to leave:
- Continue collecting rent until the transaction closes.
- Reach a global network of qualified real estate investors, rather than just listing on the local MLS.
- On Roofstock, you'll pay a competitive real estate commission (3% versus the typical 5% to 6%), with the savings helping to increase your bottom line.
- Check out the Roofstock Marketplace to see what similar rental properties in Cleveland are selling for and get an idea of what your property is worth.
What you should do before selling your rental property
There are a few things to do before going to market if you want to sell your Cleveland rental property quickly and for the highest possible price:
- Gather important documents for buyers, such as a copy of the lease and tenant rent roll, financial reports, a list of vendors and maintenance history, and a summary of past repairs and improvements.
- Buyers typically prefer properties that don't come with any problems, so get a professional property inspection done and make all necessary repairs before putting the property on the market to help get the sale price you're looking for.
- Explain to your renters that the property is for sale, how showings will be conducted, and the procedure for moving their existing lease and security deposit to the new owner.
- Determine your potential capital gains tax liability ahead of time, and investigate the option of using a 1031 tax-deferred exchange to defer paying taxes by buying another investment property in the U.S.
How to price your investment property for sale in Cleveland
Pricing your rental property for sale in Ohio is a little bit different from selling a primary residence. Of course, you want to have a competitive asking price per square foot, but you also want to emphasize the financial performance of your property to get a quick closing at a great price:
- Cap rate is a key metric for pricing your rental property. It's calculated by dividing the net operating income (NOI) by the asking price and can be used to compare your property's price to similar properties in your area.
- Cash-on-cash (CoC) return is another important metric that potential buyers will look at. It shows them how much money their down payment will generate when they finance their purchase at today's interest rates.
- After repair value (ARV) is the value of your property after all repairs have been made. This number can be helpful for sellers who can't afford to make all of the needed repairs themselves. It lets buyers know what instant equity they'll receive once all maintenance is completed.
If you're looking to sell your rental property in Cleveland, you'll want to choose an option that will help generate a quick and easy sale. Get a free price estimate and consultation.