How & Where to Sell a Buy to Let Property (25 Best Sources/Tips)

This article contains very powerful tips for selling a buy to let property and many of the best sources to use to get the best results.

 

Importance

Items that we purchase are not meant to last.

Everything has a shelf life and even though there are warranties and guarantees, these two run out the extent of the use of items and a period of time.

Examples could include the breakdown of a washer and dryer, refrigerator, air conditioning unit, etc. even our food has a shelf life as indicated by expiration dates.

If you are fortunate enough to own an additional home and have used it as a rental property, there may come a point in time where it is no longer feasible to keep that rental property even though you are earning monthly rent.

The reality is that roofs need repair and replacement, HVAC systems have run their course, or taxes have skyrocketed.

Therefore, one may want to consider how and where to sell a rental property or a buy to let property

 

15 Best Ways & Tips to Help You Sell a Buy to Let Property

 

1. Know What Buy to Let Is All About

By way of definition, buy to let is simply a way of expressing the purchase of a home with the purpose of renting out that home to a renter.

In other words, you become a landlord and you allow individuals to live in that home and pay you monthly rent.

 

2. Reasons

There are many reasons why an individual will want to sell their rental home.

Some of those reasons could include:

• A change in lifestyle
• The property has become too much work,
• Increase in taxes
• Change in tax rules
• The realized revenue each month is shrinking based on associated expenses

 

3. Advantages

There are many advantages as it relates to selling a rental property.

Some of those advantages include:

• No longer having the worry of tenants and their care of the property
• No longer being stressed out about tax implications
• Freeing up time that once was devoted to managing
• And more

 

4. Disadvantages

There are many disadvantages to selling a buy to let property.

Some of those disadvantages :

• Potential of capital gains taxes
• Loss of monthly income
• Decrease in your portfolio

 

5. Taxes

One of the big considerations if selling a buy to let property is the possibility of significant capital gains taxes.

When you sell a home that you live in there is typically tax-free revenue that can be realized when that home was your main residence.

This is not necessarily so when you buy a rental property and therefore, it is important to talk with your CPA or tax advisor as it relates to the possibility of capital gains tax associated with the selling of your buy to let property.

 

6. Seller’s Market

When considering selling the rental property you want to make sure that the market will provide you with the best sales price.

Therefore, it is best to sell in a market that is labeled as a seller’s market where the demand for housing is high, and you can get an optimum price for your property.

 

7. Equity

If you purchased your rental property a number of years ago that was at a good price and didn’t require much renovation you may realize significant appreciation for that property.

Accordingly, it may be a good time to assess that situation and in particular your equity and possibly cash out any equity on the house.

 

8. Rent Prices

Another important consideration of selling your buy to let property concerns timing.

It is important to be aware of your local market and the rent prices that are being charged for rentals.

If the rental prices drop too low, your rent assessed will also, most likely, move to that lower level as well.

It is more important to make sure that your rent covers your mortgage, taxes, and maintenance costs.

 

9. Building

Another trend that you as a landlord when considering the selling of your rental property is to be aware of is residential construction that is occurring in your area.

If it appears that developers are focusing on constructing rental housing that is a strong indicator that in your area the demand for rental apartments/housing is high.

Therefore, once these additional units are made available to renters there will be a great supply which may outdistance the demand, which could affect the rental payments by those who are renting your property.

 

10. Cap Rate

Cap rate is defined as your net operating income which is determined by taking your gross rental income minus your expenses.

You then take this figure and divide it by your purchase price.

The rate should use annual figures and the gross income is all of the income that you collected from your renters.

Operating expenses would include things like insurance, any property management fees, taxes, etc.

The bottom line is that the higher the rate will be the higher the reward.

It is important to keep in mind that rates can fluctuate depending on the market.

For example, if the current cap rate is hovering around 10% it may be lower if the rental market becomes sluggish.

 

11. Repairs

A logical question as a landlord in wishing to sell your buy to let property would be the question about any needed repairs.

The short answer to selling your investment property would be to invest in the property and make any needed repairs if they are not too much of a financial strain for you.

 

12. Other Fees

Another important factor to consider is any other specialized fees.

One of those specialized fees could be a homeowner’s association.

Often, a homeowner’s association assesses the individuals within the association a cost as it relates to the possibility of installing new roofs.

This could severely impact any profits that you may be looking at as it relates to income versus expenses.

Also See: Best Books to Read on Making Money from Flipping Houses.

 

13. Primary Residence

Another option to reduce some of your expenses as it relates to selling a buy-to-let property is to consider living in the home.

This strategy will meet the test required by the IRS as it relates to use and ownership.

The only stipulation is that you need to live in that home for two years.

If you follow this strategy, you will more than likely be able to have any capital gains waived.

 

14. Stage

If you are planning on selling your rental property and if the home is currently unoccupied that makes the selling of the property more simplified.

Specifically, you don’t have to worry about notifying the tenants, any lease agreements, etc.

In this instance it is just a matter of sprucing up your home, making any needed repairs, and staging the home for possible buyers to view the home with the possibility of selling.

 

15. Landscape

Of course, if the rental home has yards, grass, trees, shrubbery, etc. all of these would need to be properly manicured and landscaped so as to make the house have good curb appeal.

Also See: Guide to Earning Money on Vacation Rental Property.

 

16. List It

Once all of this has been accomplished and the house is ready to be put on the market, it is a matter of working with a realtor and having the home listed, shown and potential buyers coming in and viewing the home that you have for sale.

 

17. Lease

If the home is occupied by tenants, there are certain processes that need to be followed as they relate to state law and the lease agreement.

First and foremost, with tenants in the home, you will have the opportunity to collect rent until such a time that any transfer of ownership is made.

The other plus is that if an individual is looking at purchasing your home and they are planning on keeping the home as a rental then they have “ready-made tenants.”

On the other hand, the home that is purchased may prove to be a disadvantage if the potential buyers of the home want this home to be a primary residence rather than a rental.

Therefore, your buy to let property may be limited in its scope to potential sellers or potential buyers who would be classified as landlords and investors

 

18. Notice

It may not be necessary to tell your tenants that you are planning on selling the home but, a good rule of thumb would be to be transparent with those individuals and let them know that this is in the process.

Telling the tenants may also be a good idea because typically, tenants residing in a rental home do not have to cooperate with the possible sale of the home.

They do not necessarily have to allow potential buyers to view the property, allow real estate agents to come into their home, or allow surveyors or valuers of the property to enter.

This may be mitigated if there is a clause in the lease agreement which allows for this to happen.

Also See: Tips for Earning Money on Airbnb Without Owning Property.

 

19. State Laws

As with all things, it is important to check with your state of residency as it relates to selling a rental home that has tenants still living or residing within the home.

The question may arise as to whether you can evict tenants in order to sell your buy to let.

The answer is most likely no to this question as your tenants are legally entitled to stay within the home until the terms of the lease have been fulfilled.

 

20. Potential Challenges

One other possibility may present itself in that if you have tenants that have been difficult or challenging and if their rent payments are not up-to-date or have damaged the property or have refused to leave the property it may be a difficult process in selling the home.

Fortunately, or unfortunately, depending upon your perspective, there are laws that need to be abided by as they relate to the possible eviction of tenants which can delay the selling of the property.

 

21. Pay Your Tenant

Another possibility of increasing the process of selling if your tenants are still under a lease agreement is to pay the tenants to vacate the premises.

This could be a settlement that is contractually negotiated between you and the current renters and can help in expediting the sale of the buy-to-let property.

Possible suggestions for paying the tenant to vacate could include:

• Offering to pay living costs, pay the difference of a new rental for the remaining months of the lease
• Cover security deposit
• Or other innovative ideas.

 

22. Sell to Tenant

If considering the selling of your buy-to-let property you can offer the sale of the property to your current tenants.

This can be a win-win situation, if your tenants are in a financial position, for them to not only stay in the home but for you as the current owner of the home.

Also, the tenant is fully aware of the property and knows its value and any existing problems that may exist.

 

23. Sell to Buyer

When the home is ready to be listed on the market the obvious choice of where to sell the home would be through a real estate company and sell through the realtor to a buyer.

 

24. Sell to Realtor

Another option for selling your rental home is to work with a realtor who sees the value of the home and wishes to buy it, possibly make improvements, and flip the house for a profit.

 

25. Sell to Real Estate Investor

Another option that is available for individuals who wish to sell their buy to let property is to utilize a professional company that will buy your house, manages the challenge of tenants that may still be living in the home, buy the house as-is, and also take all care of all of the legal arrangements.

There are a number of websites available and all you would need to do is conduct a keyword search utilizing a search engine and type in the keywords of selling a house with tenants.

 

Personal Story

In 1971 I purchased a used vehicle that was seven years old for $500 and thought that I was getting a good bargain.

Come to find out, it was burning oil, the transmission started having difficulties and a variety of other smaller issues began to present themselves.

Eight months later I realized that I needed to make a decision as to whether to continue to pour money into this used vehicle or look at getting a new or newer vehicle.

The final straw came when I was driving and applied the brakes and there was no slowing down of the vehicle.

Come to find out the brake line had ruptured; I had lost the brake fluid and therefore the braking system had failed.

Fortunately, I was able to use the emergency brake to prevent any safety issues from occurring that would jeopardize my safety and those that shared the road.

That was the final straw and rather than sink extra money into the repair of the older vehicle we opted to use that trade-in and purchase a new vehicle.

My expenses began to outweigh the advantages of sticking with the old car rather than buying a new car and taking on payments.

 

Selling a Buy to Let Property FAQs

 

What Are the Biggest Factors to Consider When Selling a Rental Property?

The most significant factors to consider when selling a rental property include:

• Your overall lifestyle goals
• Need for income upon retirement
• Taxes
• Diversity of investments

 

What Are the Leading Indicators That May Speak About Selling a Rental Property?

Some of the leading indicators that may reflect that it’s time to sell a rental property can include:

• When a major life event occurs (new family member, death in the family, job relocation, etc.)
• When you have other significant revenue streams of passive income
• When the cap rate is below the rate of return
• When a rental property becomes more of a headache

 

You Can Do It

You made a wise decision in purchasing an investment property and have rented out the property as a landlord.

However, the time has arrived, for whatever reasons, that you wish to sell that property.

Being the shrewd investor that you are you realize that there is a process and factors to take into consideration to maximize the selling of your investment.

 

Conclusion

Nothing lasts forever and there comes a point in time that a threshold is reached which requires a decision as to whether to continue to pour money into an item or cut the item loose.

Such is the case with a rental home or a buy to let property in which the investment and the value of the property are creating little or no profit.

Fortunately, there are strategies and considerations to take into account to help an individual in the situation to make the decision and to strategize on implementing a plan of action.