If you are looking to sell your rental property in Dallas, now could be a great time to do so. The market is currently favoring sellers, with low inventory and high demand from investors. This is evident when you look at the real estate market stats for Dallas:
- Population, employment, median household incomes, and property values are all on the rise in Dallas (Data USA).
- Home values in Dallas have increased by about 80% over the last 8 years, giving sellers the opportunity to cash in on their equity (Zillow).
- Rents in the metroplex are rising year over year, making Dallas an attractive market for real estate buyers (Zumper).
Given these conditions, it's likely that you might receive multiple offers when you list your property for sale. However, before putting your rental on the market, it's important to understand all of your options in order to sell quickly and for a fair price.
Your options for selling a rental property in Dallas
Selling a rental property that is currently occupied by a tenant has its pros and cons, which is one of the reasons why some landlords try to get the tenant to leave before their lease is up. However, before taking this step, it is important to think things through and do your research on 2 key topics:
- Review your current lease to understand your rights and the tenant’s rights. In some cases, you may be able to terminate the agreement early with enough notice. Other times, you may need to pursue eviction if the tenant has violated a lease term – such as paying rent late – and they don’t agree to leave voluntarily.
- Familiarize yourself with landlord-tenant laws in Texas to ensure that you are taking all the proper legal steps.
The next step is to review your options for selling your rental property in Dallas:
1. Sell to your tenant
Instead of going through the hassle of listing your property on the multiple listing service (MLS), why not try approaching your tenant to see if they're interested in buying? If they've been renting for a while, there's a good chance they'll say yes.
When selling to your tenant, be sure they get preapproved for a mortgage, and use the right real estate contract for selling a home in Texas. This will protect both you and your tenant-buyer.
2. Pay the tenant to leave early
If your tenant isn't interested in buying, you may be able to convince them to leave before their lease is up by offering a cash-for-keys incentive. Cash for keys is when a landlord offers their tenant money in exchange for them leaving the property early and returning the keys.
Moving is inevitable at some point, so agreeing to pay for their moving expenses or helping with the security deposit for their new place can get the tenant out and give you time to make any needed repairs in preparation for listing your vacant property for sale.
3. Wait for the lease agreement to expire
You may have to wait until the lease expires before selling your property. Of course, you can list your rental property for sale a few months before the lease is up. Listing right away lets you take advantage of today's strong real estate market in Dallas, instead of running the risk that activity may slow down.
Always give your tenant proper notice before showings, and remind them they need to leave the property in good condition when they do move out if they want to get their full security deposit back.
4. Sell with the tenant in place
Many property owners selling their rental property in Dallas often use an online listing platform, such as Roofstock. This makes it easy to sell a house with a tenant already in place and saves the time and expense of trying to convince the tenant to leave.
By using Roofstock, property owners can take advantage of a number of benefits that make selling their rental property in Dallas easier and more profitable:
- Continue collecting your rental income until the day your deal closes.
- Reach a wider network of potential real estate investors on Roofstock, rather than limiting yourself local listings.
- Pay a competitive real estate commission (3% as opposed to the typical 5% to 6%), and keep more of your money to increase your return on investment (ROI).
- Look at the Roofstock Marketplace to see what other rental properties in Dallas are selling for, and stay ahead of the competition by pricing competitively.
What you should do before selling a rental property
If you're looking to sell your rental property in Dallas quickly and for a great price, there are a few things you can do before putting it on the market:
- Gather together a buyer's package of important documents such as a copy of the lease and tenant rent roll, financial reports like a profit and loss (P&L) statement, a list of vendors and maintenance history, and a summary of any capital repairs and improvements made in recent years.
- Buyers usually prefer properties that don't come with any problems, so have a professional property inspection done and make any necessary repairs beforehand so the buyer won't try to haggle about your asking price.
- Explain to your tenants that the property is for sale, how showings will be handled, and the process for transferring their existing lease and security deposit to the new owner.
- Calculate your potential capital gains tax liability, and look into the possibility of using a 1031 tax-deferred exchange to delay paying the tax by buying a replacement investment property anywhere in the U.S.
How to price your investment property for sale in Dallas
Selling an investment property in Dallas is different from selling a primary residence in a few key ways. While the price per square foot is important, you'll also need to be aware of the Dallas rental market and what similar properties are selling for. Finally, it's important to know your numbers when it comes to things like cap rate, cash-on-cash return, and after repair value (ARV):
- Cap rate is a measure of the income your property generates compared to its purchase price. A higher cap rate means higher returns and is often more attractive to potential buyers.
- Cash-on-cash (CoC) return is another important metric, which measures the amount of cash flow you're generating relative to the amount of money you've invested.
- ARV is important to know because it can help you price your property competitively if you can't afford to make any needed repairs.
By understanding the market and knowing these metrics, you'll be in a much better position to sell your Dallas rental property quickly and for a good price. Get a free price estimate and consultation for your property in Dallas.