You're in luck if you're considering selling your rental property in St. Louis. The real estate market in the metro area is strong right now, and there is a lot of interest in investment properties. Based on these St. Louis real estate market statistics, it's easy to understand why:
- Employment, median household incomes, and property values are all on the rise in St. Louis (Data USA).
- Home values in St. Louis have increased by about 59% over the last 5 years, with some sellers seizing the opportunity to sell and turn equity into cash (Zillow).
- More than 50% of the households in metropolitan St. Louis are occupied by renters, a statistic that every real estate buyer loves to see (Zumper).
St. Louis currently has many of the characteristics of a seller's market. As a result, you may receive multiple offers when you list. But before you do, it's essential to understand all the options available to you in the greater St. Louis area. This way, you can ensure a fast sale at a fair price.
Your options for selling rental property in St. Louis
If you're selling a rental property that a tenant currently occupies, there are pros and cons to doing so. For example, you might be tempted to try and get the tenant to leave before their lease is up, but it's important to do your research first.
There are 2 key things you need to keep in mind:
- Read your current lease. This will help you understand what your rights are, as well as the tenant’s rights. In some cases, you may be able to terminate the lease agreement early with enough notice. However, there may be other times when you can start the eviction process if the tenant has violated a lease term—such as paying the rent late—and doesn’t agree to leave.
- Review the landlord-tenant laws in Missouri to make sure that you are following all of the rules and regulations.
After you've figured out what you can and can't legally do, the next step is to review the best options for selling your St. Louis rental property:
1. Sell to your tenant
One option is to sell the property to your tenant instead of going through the hassles of putting the property on the multiple listing service (MLS). This can be a good option if they've been renting for a while and are interested in buying.
To make sure everything goes smoothly, have the tenant get preapproved for a mortgage and use the proper real estate contract for selling a home in Missouri. This will protect both you and the tenant-buyer.
2. Pay the tenant to leave early
If your tenant doesn't want to buy, you may be able to convince them to leave early 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 the tenant leaving the property early. In addition, the tenant leaving early can give you time to make needed repairs before listing your vacant property for sale.
3. Wait for the lease to expire
If the lease doesn't have an early cancellation clause and the tenant doesn't want to leave early, you'll need to wait until their lease is up before putting the property on the market. Of course, you can let them know a few months in advance that you'll be selling so they can start looking for another place.
It's also important to remember that showings will need to be scheduled around your tenant's schedule, and they should be given proper notice before anyone comes by. Additionally, when they do move out, remind them that they need to leave the property in good condition if they want their security deposit back.
4. Sell with the tenant in place
Listing your rental property on an online platform like Roofstock is an excellent option. You can sell your house with a tenant in place, which saves you the time and expense of trying to convince the tenant to leave:
- Maximize cash flow by collecting your rental income until the day your deal closes.
- Reach a global network of qualified real estate investors on Roofstock instead of limiting yourself to the local buyers on the MLS.
- Pay a competitive real estate commission (3% versus the typical 5% to 6%) and keep more of your hard-earned money.
- Research the Roofstock Marketplace to see what other rental properties in St. Louis are selling for to gain a competitive edge.
What you should do before selling rental property
There are a few things to do before going to market if you want to sell your St. Louis rental property quickly and for the highest price:
- Prepare a buyer package of essential documents, including a copy of the lease and tenant rent roll, financial statements such as a profit and loss statement, a list of suppliers and maintenance history, and an overview of recent capital repairs and improvements.
- Buyers like to purchase property with no issues, so have a professional property inspection and make necessary repairs ahead of time so that the buyer does not attempt to lowball your asking price.
- Talk to your renters about the property's sale, how showings will be conducted, and the transition process for transferring their old lease and security deposit to the new owner.
- Calculate your potential capital gains tax liability, and see whether a 1031 tax-deferred exchange might help you avoid paying taxes by purchasing a new investment property in the U.S.
How to price your investment property for sale in St. Louis
You want potential buyers to see your property as a good investment, so they're more likely to make an offer quickly. Understanding the current market conditions and your best options for selling can help you ensure you get the best price for your rental property.
You'll need to strike a balance between pricing your rental property in St. Louis competitively on a per-square-foot basis and marketing its financial performance:
- Calculate the cap rate by dividing the net operating income (NOI) by the asking price. Compare this ratio to similar properties for sale in your area to ensure you are competitively priced.
- Cash-on-cash (CoC) return helps potential buyers understand how much their down payment will generate when financing their purchase.
- Estimate the after repair value (ARV) of your property if you cannot afford to make all of the needed repairs. This will help buyers understand the instant equity they'll receive once all deferred maintenance is completed.
Choosing the right option for selling your rental property in St. Louis could lead to a fast sale at a great price. Get a free price estimate and consultation.
With Roofstock, you'll be able to connect with experienced investors who are interested in buying rental properties in St. Louis just like yours.