Now may be the perfect time to sell your rental property in Milwaukee. Inventory is limited, and demand from investors is high, which makes sense when looking at real estate market statistics for Milwaukee:
- Population, property values, and median household incomes are all on the rise in Milwaukee (Data USA).
- Home values in Milwaukee have increased by about 75% over the last 5 years, offering sellers the opportunity to profit by selling and turning equity into cash (Zillow).
- Rents in greater Milwaukee are increasing year over year, which is great news for any real estate buyer (Zumper).
If you're looking to sell your rental property in Milwaukee, you're in luck. The market conditions are ripe for sellers, and you might receive multiple offers. However, before listing your property, it's important to understand your options for a quick sale and fair price.
Your options for selling rental property in Milwaukee
Selling a rental property occupied by a tenant has its advantages and disadvantages, which is why some landlords try to get the tenants to leave before their lease is up. Think things through and research 2 important topics:
- Understand 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 resort to eviction if the tenant has violated a lease term—such as not paying rent on time or not taking care of the property—and doesn’t agree to leave.
- Understand landlord-tenant laws in Wisconsin to ensure that you are taking all of the necessary legal steps.
The next step is to decide on your best options for selling your rental property in Milwaukee:
1. Sell to your tenant
Selling to your tenant means that you don't have to list your property on the multiple listing service (MLS), go through a real estate agent, or do any repairs/updates to the property. This can save you time and money and avoid any potential hassles associated with showing the property to multiple prospective buyers.
Just be sure the tenant-buyer is preapproved for a mortgage, and use the correct real estate purchase contract for your area.
2. Pay the tenant to leave early
Cash for keys is a type of incentive offered to tenants in order to convince them to leave a property early. The idea is that the tenant will be given a certain amount of money (usually equal to one or 2 months of rent) in exchange for leaving the property in good condition and handing over the keys.
This can be a great option for sellers who need to make repairs or updates to the property before listing it for sale.
3. Wait for the lease to expire
Sometimes you may need to wait for the lease to expire before selling your property. Of course, you can put your rental property on the market a few months before the lease ends. This option allows you to sell the property without having to pay for your tenant’s moving expenses.
However, there are some risks associated with waiting to sell. Market conditions could change in favor of buyers, making it harder to sell your property at a good price. Additionally, you could miss out on potential opportunities to sell sooner if you wait until the lease is up.
4. Sell with the tenant in place
Roofstock is an online listing platform that many property owners use to sell rental homes in Milwaukee. It's simple to advertise your home while having a tenant, and you won't have to spend time and money attempting to persuade the tenant to leave:
- Keep collecting your rental income until the deal closes.
- Have a larger, global pool of potential buyers, rather than limiting yourself to those local to the MLS.
- Pay competitive real estate commissions—3% as opposed to the typical 5% or 6%.
- See what other rental properties in Milwaukee are selling for on the Roofstock Marketplace and stay ahead of the competition.
What you should do before selling rental property
If you want to sell your rental property in Milwaukee fast and for top dollar, there are a few things you should do:
- Compile a buyer's package of important documents, including 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. This will give potential buyers confidence that they are purchasing a problem-free rental property.
- Have a professional property inspection and make any needed repairs ahead of time. By doing this, you can avoid the buyer trying to lowball your asking price.
- Explain to your tenants 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. This will help to ease the transition for your tenants and make them more likely to cooperate with showings.
- Calculate your potential capital gains tax liability, and explore 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. This can be a smart move for some sellers because it allows them to defer paying taxes on their sale and reinvest that money into another property.
How to price your investment property for sale in Milwaukee
When pricing your rental property for sale in Milwaukee, it's important to be competitive on a price-per-square-foot basis. But you also want to emphasize the financial performance of your property to potential buyers in order to get a fast closing at a great price:
- One way to do this is by calculating the cap rate. This is done by dividing the net operating income (NOI) by the asking price. By comparing this ratio to similar properties for sale in your area, you can ensure your property is priced competitively.
- Another way to sell potential buyers on your property is by emphasizing its cash-on-cash return. This will show them how much money their down payment will generate, given today's interest rates.
- Finally, you may want to determine your property's after repair value (ARV). This is the value of your property if you were to make all of the necessary repairs. By doing this, you can show buyers the instant equity they would receive once all maintenance is completed.
Get a free price estimate and consultation for your property in Milwaukee.