If you're thinking about selling your Pittsburgh rental property, now may be the perfect time. High demand from investors and low inventory may make it easier to sell. When you take a look at the statistics for the Pittsburgh real estate market, it's easy to see why.
Employment, median household income, and property values are all rising in Pittsburgh (Data USA and BLS). Home prices in Pittsburgh have increased by approximately 60% over the past five years, and sellers are benefiting from buyer demand by selling and cashing in on their assets (Zillow). Rents in the Pittsburgh metropolitan area have risen steadily each year, and 50% of households now live in rented housing – two data points every real estate buyer wants (Zumper).
Pittsburgh is a seller's market, so you're likely to receive multiple offers when you put your property on the market, but if you want a quick and fair sale, it's important to understand all of your options for selling your Pittsburgh area rental property before you hit the market.
Options for Selling Rental Property in Pittsburgh
If you're thinking about selling your rental property, you might be wondering what to do about your current tenants. After all, it's hard to sell a property that's already occupied. In some cases, landlords may try to get tenants to move out early so they can show the property to potential buyers.
However, this is not always easy and often leads to disputes, so it's important to read your current lease and check your state's landlord-tenant laws before taking any action.
Depending on your lease, you may be able to terminate the lease early if you give enough notice. You may also need to seek eviction if your tenant violates the terms of the lease (such as not paying rent or damaging the property) and does not agree to the eviction. Check out Pennsylvania's landlord-tenant laws to make sure you're doing everything by the book, so you can better understand your rights and obligations.
After determining what you can and can't legally do, the next step is to explore the different options for selling a rental property in Pittsburgh.
1. Sell to a tenant
This is often the quickest and easiest way to sell a rental property, and if you have a good relationship with your tenant and they are interested in purchasing the property, it can be a win-win situation for both parties.
However, before you go ahead, you need to make sure that they are actually qualified to buy the property. In some cases, you may not get as much money by selling the property to the tenant.
2. Pay the tenant for an early move-out fee
If you don’t mind paying your tenants money to move out early, this is a good option. With a cash-for-keys incentive, you simply pay your tenants a lump sum in exchange for them vacating your property within a certain period of time.
This can also be an effective way to evict problem tenants or those who aren't paying their rent. Just be sure to follow all legal requirements and document everything if you offer these types of incentives.
3. Wait until the lease expires
Many landlords wait until the end of their tenant's lease before selling the property. While this seems like the easiest option, it does carry some risks. Market conditions can change quickly, and you may find that the property is worth less than when you first rented it.
If the tenant is not happy with the sale, they may intentionally damage the property in an attempt to get a larger payment from you. Finally, you may have to notify the tenant each time the property is open to prospective buyers, which can be confusing and inconvenient. Overall, to avoid these potential problems, it is usually best to sell sooner rather than later.
4. Sell with tenants present
If you are thinking about selling a rental property in Pittsburgh, you may want to consider keeping the tenants and selling through Roofstock, which has several advantages.
You'll continue to receive rent payments until the closing date, which will provide you with much-needed cash flow during the selling process Listing on the Roofstock Marketplace allows you to reach a wider audience of potential buyers than your local Multiple Listing Service (MLS) Roofstock charges competitive real estate commissions, so you'll save money on commission The Roofstock Marketplace provides you with data to help you properly price your property.
All things considered, selling with tenants present through Roofstock can be a smart choice for Pittsburgh rental property owners looking to maximize their profits.
What to do before selling your rental property
Before you put your rental property up for sale in Pittsburgh, there are a few things you should prepare.
Put together a buyer's package. This includes relevant documents such as the lease, repair history, and current rent ledger. Having this information readily available will make the selling process much smoother. Conduct a pre-sale inspection. This will identify any potential issues that may prevent a sale. Let tenants know the property is for sale. This includes notices about how viewings will be handled and how deposits will be transferred to the new owner. Consider a tax-deferred exchange. Calculate your potential capital gains tax liability and figure out how to use a 1031 exchange to purchase a replacement property anywhere in the U.S.
Taking these steps will increase your chances of selling your rental property quickly and for a high price.
How to Price Your Investment Property for Sale in Pittsburgh
When selling a rental property in Pittsburgh, you need to price it differently than your primary residence. Your asking price per square foot needs to be competitive, but you also need to advertise the financial performance of your property to get a good price and close the transaction quickly.
Cap rate, cash-on-cash return, and after-repair value (ARV) are three factors buyers look at. Here's what you need to know about each.
Cap rate is the property's annual net operating income (NOI) divided by the purchase price. In other words, it is a measure of how much income a property will generate relative to the purchase price. The higher the cap rate, the more attractive the property is to buyers. Cash on Cash Return (CCR) is a measure of how much cash an investor will earn on their investment each year. It is calculated by dividing the annual pre-tax cash flow by the total amount of cash invested in the property. For example, if an investor purchases a property for $100,000 and generates $10,000 in pre-tax cash flow per year, the CCR is 10%. The higher the CCR, the more attractive the property is to buyers. ARV is the estimated value of a property after repairs and renovations are completed. This is important for two reasons. First, it allows buyers to see the potential appreciation of the property. Second, it tells them how much investment will be required to realize that return.
Understanding these three metrics can help you price your rental property for sale in Pittsburgh. Get started by receiving a free price quote and consultation for your property.