Real estate investors have Dallas, TX on their radar screen, making it a great time to sell if you own rental property in Dallas. They say that everything is bigger in Texas, and that’s definitely true when it comes to the economy and the selling prices for rental property in Dallas:
- Population, job growth, median property values, and household incomes are all going up in Dallas (Data USA)
- Home values in Dallas have more than doubled over the past eight years, making it the perfect time to turn the accrued equity in your rental property into investable cash (Zillow)
- Rents in Dallas keep going up year-over-year while the percentage of renter-occupied households in the metro area keeps growing (RENTCafé)
Statistics like these help to explain why the demand for rental property in the Dallas-Fort Worth area is so strong. Before you decide to sell, it’s important to understand the best option for you and how to price your property to get top dollar.
Your Options For Selling Rental Property in Dallas
There are good options for selling your rental property in Dallas with or without a tenant in place. If you do have a current renter, there are two important things to do before you try and get the tenant to leave:
- Take a look at your current lease at the contingencies. If the tenant has been paying the rent late or not taking care of the property, you may be able to convince them to leave by threatening an eviction. Or, you may have an early termination clause that allows you to give the tenant notice to vacate before the lease expires.
- Review the landlord-tenant laws in Texas to make sure the law is on your side. Some states are tenant-friendly, while rental laws in other states are squarely on the side of the landlord. Knowing the rules of the game will help you to avoid accidentally breaking the law.
Next, let’s look at the best options for selling if you own rental property in Dallas:
1. Sell to your tenant
Oftentimes a tenant will jump at the chance to buy the property they’re currently renting. Selling your rental to the tenant saves you money in expensive real estate commissions and the time-consuming task of listing the property for sale.
If you do sell to your tenant, make sure to have the purchase contract professional drawn up by a real estate agent or a lawyer for a fixed fee, and have the tenant get preapproved for their mortgage.
2. Pay the tenant to leave early
Even if your lease doesn’t have an early termination clause, you may still be able to pay the tenant to leave early by offering a cash incentive. If you have a difficult tenant who may not cooperate with property showings, this can be the best path to take. By getting the tenant to leave early, you’ll be able to make any needed repairs and avoid the inconvenience of having to give notice before showing the property.
3. Wait for the lease to expire
If the tenant doesn’t want to leave early, you can still market the property for sale while waiting for the lease to expire. Showings may be more complicated, but you’ll also have cash flow coming in while the property is on the market. Be sure to give your tenant proper notice that you won’t be renewing the lease, and be ready to start the eviction process if they refuse to leave on time.
4. Sell with the tenant in place
Instead of going through the trouble of removing a tenant, many rental property owners in Dallas are using online listing platforms like Roofstock to sell turnkey houses with a tenant in place:
- Cash flow continues right up until the day the transaction closes escrow
- Reach a global audience of real estate investors instead of restricting yourself to the limited reach of the local Dallas MLS
- Pay a lower real estate commission (3% vs. the standard 5% - 6% fee) to keep more of your hard-earned money
- Use the Roofstock Marketplace to see what other rental properties are selling for in Dallas to stay one step ahead of the competition
What You Should Do Before Selling Rental Property
If you want to sell your rental property in Dallas fast, it’s important to get all of your documents organized and your property ready to sell:
- Put together a complete buyer file for your rental property that includes a copy of the lease, tenant application, rent roll, recent financial statements, maintenance history, and a list of recent capital repairs and improvements
- Have the property professionally inspected and make any needed repairs so that the buyer’s inspection comes out clean
- Keep the property well maintained so that prospective buyers know the house will be easy to rent out if and when the current tenant leaves
- Let your tenants know ahead of time the property is for sale, how their rights will be respected with showings, and how the lease and security deposit will transfer to a new owner
- Calculate your potential profit and capital gains tax liability, and research how a 1031 exchange can be used to defer the payment of capital gains tax
How to Price Your Investment Property for Sale in Dallas
Pricing your rental property for sale in Dallas requires more than just looking at the price per square foot. Investors are concerned about the income the property will generate, so it’s important to understand how real estate investors think:
- Focus on the historical performance of your rental property by highlighting the NOI, annual rent increases, quality of the tenant, and total ROI you’ve been enjoying
- Calculate key financial rental property metrics such as cap rate, GRM, NOI, ROI, and cash-on-cash return
- If your property has a lot of repairs that need to be made that you’re unable to do, calculating the total repair expense will help you determine the after repair value (ARV) to set the right purchase price
Even in a seller’s market like Dallas, it’s important to understand your options for selling rental property to make sure you’re not leaving money on the table. To get started, you can get a free price estimate and consultation for your property in Dallas here: https://www.roofstock.com/seller-services