If you're thinking about selling your rental property in Jackson, now might be a great time to do it. Inventory is low and there's high demand from investors. A quick look at these statistics explains why:
- Population and property values are on the rise in Jackson (Data USA).
- Home values in Jackson have increased by approximately 50% over the last 5 years, giving sellers the opportunity to sell and turn equity into cash (Zillow).
- Rents in metropolitan Jackson have been increasing year over year, something that's always music to a real estate investor's ears (RentCafe).
In short, the Jackson real estate market is strong and stable, so you could receive multiple offers if you list your property. However, it's crucial to understand your options so you can sell quickly and for a fair price.
Your options for selling rental property in Jackson
Selling a rental property that is currently occupied by a tenant has advantages and disadvantages, which is why some landlords try to get the tenant to leave before their lease is up. But, before you do anything, think things through and research 2important topics:
- Review your current lease terms and what they mean for you and the tenant. Some leases allow for early termination with enough notice given. Other times, you may need to pursue eviction if the tenant has violated a lease term—such as paying rent late or causing damage—and doesn’t agree to leave.
- Review the landlord-tenant laws in Mississippi to ensure that you are doing everything within legal bounds.
The next step is to decide on the best option for selling your rental property in Jackson:
1. Sell to your tenant
If you're thinking of selling your rental property, why not sell it to your tenant if they’re interested? This can be a much easier process than listing the property on the multiple listing service (MLS) and dealing with real estate agents.
When you sell to your tenant, it's important that they get preapproved for a mortgage right away. This can ensure that the sale goes smoothly by helping you avoid financing issues. Additionally, using a state-approved real estate contract is important to avoid legal issues.
2. Pay the tenant to leave early
If your tenant isn’t interested in purchasing the property, you may be able to convince them to vacate the premises before the lease is up by offering a cash-for-keys incentive.
By doing this, you’ll be helping them with their moving expenses or security deposit for their new place, and giving yourself time to make necessary repairs before listing your property.
3. Wait for the lease to expire
If your tenant can't afford to buy and doesn't want to move, you may have to wait until the lease expires. However, you can list your rental property for sale a few months before the lease is up.
Remember to give your tenant sufficient notice before showings and remind them that they need to leave the property in good condition if they want to get their security deposit back. Also keep in mind that market conditions could change during the time you're waiting for the lease to expire, resulting in a lower sale price.
4. Sell with the tenant in place
Many property owners who want to sell their rental property in Jackson find it easiest to use an online listing platform like Roofstock. This way, you can keep collecting rental income until the day your deal closes:
- Roofstock technology makes it easier than ever to tap into a global market of potential buyers instead of restricting yourself to the limited exposure on the local MLS.
- You'll pay a competitive real estate commission (3% as opposed to the standard 5% to 6%) and keep more of your profits to boost your bottom line.
- Do your research on the Roofstock Marketplace to see what other properties in Jackson are selling for. This will give you an idea of the competition and help you price your own property accordingly.
What you should do before selling rental property
If you're looking to sell your rental property in Jackson, there are a few key things you can do to increase your chances of a quick sale at a great price:
- Compile a buyer package with all of the important documents related to the property, including a copy of the lease and tenant rent roll, financial reports, a list of vendors and maintenance history, and a summary of any capital repairs or improvements made in recent years.
- Have a professional property inspection done to identify any potential issues that could be problematic for buyers. Addressing these problems ahead of time will give buyers more confidence in the asking price.
- Explain the sale process to tenants and let them know how showings will be handled so that they feel comfortable with the transition.
Capital gains tax can be a significant burden when selling a rental property, but there are ways to delay paying it. One option is to use a 1031 tax-deferred exchange, which allows you to sell the property and reinvest the proceeds into another investment property anywhere in the U.S. This can be a great way to defer the tax liability and continue growing your investment portfolio.
How to price your investment property for sale in Jackson
Pricing your rental property for sale in Jackson is different from selling a primary residence. It's important to have a competitive asking price per square foot. But you'll also want to emphasize the financial metrics of your rental, including cap rate, cash-on-cash return, and after repair value (ARV):
- Calculate the cap rate by dividing the net operating income (NOI) by the asking price, then compare that ratio to similar properties for sale in your area to ensure you're competitively priced.
- Include a cash-on-cash return to help potential purchasers evaluate how much money their down payment will earn when they finance their purchase.
- If you can't afford to make all of the required repairs, figure out the ARV of your property so potential buyers understand the immediate equity they'll gain once all of the maintenance is completed.
Ready to sell your property in Jackson? Get a free price estimate and consultation.