How to price and sell your rental property in Montgomery, AL

If you are looking to sell your rental property in Montgomery, now could be a great time. The market is currently in favor of sellers, with strong demand from investors and not enough inventory to go around. The real estate market in Montgomery has the stats that investors like to see:

  • Employment, median household incomes, and property values are all on the rise in Montgomery (Data USA).
  • Home values in Montgomery have increased by about 45% over the last 5 years, with owners profiting from rising prices by selling and turning equity into cash (Zillow).
  • Rents in metropolitan Montgomery are rising year over year, a metric that every real estate investor loves (Zumper).

Selling a rental property in Montgomery can be a quick and easy process if you know your options. Before listing your property, understand the different ways you can sell and ensure you get a fair price for your home.


Your options for selling rental property in Montgomery

Some investors try to end the lease early and sell the home vacant, while others sell with a tenant in place. There are pros and cons to each approach. However, before you make a decision, research 2 important things:

  1. If you want to end your lease agreement early, read over your current lease to see if this is possible. You may be able to give the tenant notice or pursue eviction if they have violated terms of the lease, such as paying rent late or having an illegal roommate.
  2. Make sure you follow all landlord-tenant laws in Alabama so you handle the situation correctly. 

Next decide on the best option for selling your rental property.

1. Sell to your tenant

Before you hire a real estate agent and fill out the forms to list your rental on the local multiple listing service (MLS), consider approaching your tenant to see if they’re interested in buying. They might just say yes If they’ve been renting for a while. 

If they're interested, make sure they get preapproved for a mortgage. A mortgage preapproval is a commitment from a lender that says they're willing to give the borrower a loan for a certain amount, based on the borrower's financial information. Also, be sure to use the right real estate contract for selling a home in Alabama to protect both you and your tenant-buyer.

2. Pay the tenant to leave early

If your tenant doesn't want to purchase the property, you may be able to convince them to leave before their lease is up by offering a cash-for-keys incentive. This is where you agree to pay for their moving expenses or help with the security deposit for their new place in exchange for them leaving the property.

Eventually they will need to move anyway, so this can be a good way to get them out and give you time to make any needed repairs before listing your vacant property for sale.

3. Wait for the lease to expire

If the tenant doesn't want to buy or leave early, you'll need to wait until the lease expires. Of course, you can list the property a few months before the end of the lease, but you'll need to give your tenants proper notice before showings.

However, there are risks associated with waiting to sell your rental property until the lease expires. Your tenant could damage the property, which would lower its value. That's why it's important to remind them they need to leave the property in good condition if they want to get all of their security deposit back. Secondly, if the housing market dips, you may not be able to get as much for your property as you could have if you'd sold it earlier.

4. Sell with the tenant in place

Many property owners who sell rental property in Montgomery use an online listing platform like Roofstock. You can reach a global network of qualified real estate investors instead of limiting themselves to the MLS.

Here are some benefits of using Roofstock:

  • Keep collecting your rental income until the day your deal closes to maximize your cash flow.
  • Pay a competitive real estate commission (3% versus the typical 5% to 6%), keep more of your hard-earned money, and increase your return on investment (ROI).
  • Use the Roofstock Marketplace to see what other rental properties in Montgomery are selling for.


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What you should do before selling rental property

To sell your rental property in Montgomery quickly and for a high price, there are a few key steps to take before listing:

  • Gather important documents related to the property, such as a copy of the lease agreement, tenant rent roll, financial reports, vendor list, maintenance history, and summary of any capital repairs or improvements made in recent years.
  • It will be easier to sell the property if it is in good condition, so have a professional inspection done and make any necessary repairs before putting it on the market.
  • Inform your tenants that you are planning to sell the property and explain how showings will be handled. Let them know that arrangements will be made for transferring their existing lease and security deposit to the new owner.
  • Understand your potential tax liability for capital gains and explore the possibility of using a 1031 tax-deferred exchange to delay payment by purchasing another investment property.


How to price your investment property for sale in Montgomery

Pricing your rental property means understanding how buyers think. You'll want to have a competitive asking price per square foot, but you should also highlight the financial performance of your property to get a fast closing at a great price:

  • Potential buyers will be interested in your property's cap rate, which is calculated by dividing the net operating income (NOI) by the asking price. Comparing this ratio to similar properties for sale in your area will ensure you're priced competitively.
  • Cash-on-cash return can help potential buyers understand how much money their down payment will generate when they finance their purchase at today’s interest rates.
  • Determining the after repair value (ARV) of your property is important if you can't afford to make all of the needed repairs. This will help buyers understand the extra equity they’ll receive once all of the maintenance is done.

Emphasizing these key points will help you sell your rental property in Montgomery at a great price. Get a free price estimate and consultation.


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This article, and the Roofstock Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, legal, or real estate advice. Roofstock is not your advisor or agent. Please consult your own experts for advice in these areas. Although Roofstock provides information it believes to be accurate, Roofstock makes no representations or warranties about the accuracy or completeness of the information contained on this blog.
Jeff Rohde


Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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