If you're looking to sell your rental property in Kansas City, Missouri, now may be the perfect time. Low inventory and high demand from investors have made it a seller's market in Kansas City.
In Kansas City, population, employment, median household income, and property values are all trending upwards (Data USA). Home prices in Kansas City have increased by approximately 78% over the past five years as sellers seize the opportunity to sell and liquidate their assets (Zillow). Rents in the Kansas City metropolitan area have increased year over year, with 45% of households living in rented housing – two statistics any real estate buyer wants to see (Zumper).
All of these trends point to one thing: Kansas City is the best place to sell right now if you want to sell quickly and at the right price. Luckily, selling a rental property in Kansas City doesn't have to be a difficult and stressful process. With a little preparation and understanding of the market, you can sell quickly and get a great return on your investment.
Options for Selling Rental Property in Kansas City
There are pros and cons to selling a rental property with current tenants, which is why some landlords try to get their tenants to move out before their leases expire. However, before taking this step, it's important to think carefully and research two key points:
Review your current lease to understand your rights and those of your tenant. In some cases, you may be able to terminate the lease early with sufficient notice. You may also need to seek eviction if your tenant violates the terms of the lease (such as not paying rent) and refuses to leave voluntarily. Be sure to familiarize yourself with Missouri's landlord and tenant laws and follow all rules and regulations.
Once you understand what you can and cannot legally do, the next step is to determine the best course of action to sell your Kansas City rental property. Each option has its own advantages and disadvantages, so it is important to carefully consider all of your options before making a decision.
1. Sell to a tenant
If you're looking to sell a rental property in Kansas City, you also have the option of selling directly to your tenant, which is a great way to avoid the hassle of listing your property on the Multiple Listing Service (MLS).
But before you do, make sure your borrower is pre-approved for a mortgage and that you are using the proper real estate contract for selling a home in Missouri. This helps protect both you and the borrower-buyer.
2. Pay the tenant for an early move-out fee
If your tenant doesn't want to purchase the property, offering them the incentive of paying cash in exchange for the keys may convince them to move out before the end of their lease.
A cash-for-keys incentive is a contract between a landlord and a tenant in which the landlord provides financial assistance in exchange for the tenant returning the keys to the rental property. This type of arrangement is often used as a way to get tenants to move out of a rental property early so repairs can be made before the home is put on the market.
3. Wait until the lease expires
You may have to wait until your lease expires – you can usually register your property for rental a few months before your lease expires.
Be sure to give your tenants plenty of notice before any viewings and let them know that if they want their deposit back, they must leave the property in good condition when they move out. Some states allow landlords to withhold some or all of a tenant's security deposit if the tenant incurs damage beyond normal wear and tear.
4. Sell with tenants present
When selling a rental property in Kansas City, many property owners use an online listing platform like Roofstock. This way, you can sell your home with your tenants still in it, saving you the time and expense of convincing them to move out. Some benefits of using Roofstock include:
Receive rental income until the day you close Have your home seen by a global network of qualified real estate investors (not just local MLS investors) Pay competitive real estate commissions Stay ahead of the competition by seeing what other Kansas City properties are selling for on the Roofstock marketplace
What to do before selling your rental property
Follow these four steps to sell your Kansas City rental property fast and for top dollar.
Gather important documents related to the property, such as copies of lease agreements and tenant rent ledgers, financial reports including income statements, a list of vendors and maintenance records, and a summary of any capital repairs or improvements made in recent years. Conduct a professional property inspection to identify potential issues that may be deal breakers for a buyer and address these issues before putting the property on the market. Inform tenants of your plans for selling the property, how you will handle viewings, and the procedures for transferring existing leases and deposits to the new owner. Understand potential capital gains tax liability and consider the possibility of using a 1031 tax-deferred exchange to defer payment of taxes by acquiring another investment property in the U.S.
How to Price Your Investment Property for Sale in Kansas City
Finding the right balance between price and value is key when selling a rental property in KC. Your asking price per square foot needs to be competitive, but at the same time, you need to show potential buyers the financial benefits of purchasing the property.
One way to do this is to calculate the cap rate, which is done by dividing the net operating income (NOI) by the asking price. Comparing this ratio to similar properties for sale in your area can help you determine if the property is priced appropriately. Another metric you can use is the cash-on-cash return, which helps prospective buyers understand how much money their down payment will generate when financing the purchase price. It's also important to determine the after-repair value (ARV) of the property if you can't afford to make all the necessary repairs. This gives buyers an idea of the immediate asset value they will receive once all maintenance is completed.
Ultimately, choosing the right options for selling your Kansas City rental property can help you sell quickly and for top dollar. Get started by getting a free estimate and consultation for your Kansas City property.