If you're thinking about selling your rental property in Jackson, now could be the perfect time. Inventory is low and demand from investors is high. A quick look at the statistics below will tell you why.
Jackson is experiencing a rise in population and property values (Data USA). Home prices in Jackson have increased by approximately 50% over the past five years, giving sellers the opportunity to sell and cash in on their assets (Zillow). Rents in the Jackson metropolitan area have increased year over year, which is always good news for real estate investors (RentCafe).
This means that the Jackson real estate market is strong and stable, and you're likely to receive multiple offers when you put your property on the market, but it's important to understand your options in order to sell quickly and at a fair price.
Options for Selling Rental Property in Jackson
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 the lease ends. But before you do anything, think carefully and research two important topics:
Review your current lease terms and what they mean for you and your tenant. Some leases allow for early termination with sufficient notice. You may also need to seek eviction if your tenant violates the terms of the lease (such as not paying rent or causing damages) and does not agree to the eviction. Review Mississippi's landlord-tenant laws to make sure you're doing everything within the law.
The next step is to determine your best option for selling your Jackson rental property.
1. Sell to a tenant
If you are thinking about selling your rental property, why not try selling to your tenants if they are interested? This is a much easier process than listing your property on the MLS (Multiple Listing Service) and dealing with a real estate agent.
If you are selling to a borrower, it is important that the borrower get pre-approved for a mortgage right away. This will help avoid financing issues and ensure the sale goes smoothly. Additionally, using a state-approved real estate contract is important to avoid legal issues.
2. Pay the tenant for an early move-out fee
If your tenant isn't interested in purchasing the property, offering them the incentive of paying cash in exchange for the keys may convince them to vacate the property before the end of the lease.
This allows you to assist tenants with moving expenses and deposits on their new homes, and it also gives you time to make any necessary repairs before putting the property on the market.
3. Wait until the lease expires
If your tenant can't afford to buy and doesn't want to move, they may have to wait until the end of their lease, although it's possible to put the property up for sale a few months before the lease ends.
Be sure to give your tenant plenty of notice before the viewing and remind them that they need to leave the property in good condition if they want their deposit back. Also, keep in mind that market conditions may change while you're waiting for the lease to expire, which could result in a lower selling price.
4. Sell with tenants present
Many property owners looking to sell their rental property in Jackson find it easiest to use an online listing platform like Roofstock, which allows them to continue earning rental income right up until the day the deal closes.
Roofstock technology makes it easier than ever to go beyond the limited exposure on your local MLS and reach a global market of potential buyers. Pay competitive real estate commissions (3% instead of the standard 5%-6%), keeping more for your profit and increasing your bottom line. Research on the Roofstock Marketplace to see what other properties in Jackson are selling for, so you can stay on top of the competition and price your property accordingly.
What to do before selling your rental property
If you are thinking about selling your rental property in Jackson, there are some important things you can do to increase your chances of selling quickly and for a high price.
Create a buyer package with all the important documents related to the property. This includes copies of lease agreements and tenant rent ledgers, financial reports, a list of vendors and maintenance history, and an overview of any capital repairs or improvements made in recent years. Carry out a professional property inspection to identify any potential issues that may be problematic for a buyer. Resolving these issues up front will give the buyer confidence in your asking price. Explain the selling process to tenants and let them know how viewings will work to give them peace of mind in the transition.
Capital gains taxes can be a big burden when selling a rental property, but there are ways to delay paying them. One option is to use a 1031 tax-deferred exchange, which allows you to sell the property and reinvest the proceeds into another investment property in the U.S. This is a great way to postpone your tax liability and continue to grow your investment portfolio.
How to Price Your Investment Property for Sale in Jackson
When selling a rental property in Jackson, pricing is different than selling a home. It's important to be competitive in your asking price per square foot. But you also need to focus on rental property financial metrics, such as cap rate, cash-on-cash return, and after-repair value (ARV).
Calculate your cap rate by dividing your net operating income (NOI) by your asking price, then compare that ratio to similar properties for sale in the neighborhood to make sure your price is competitive. Including a cash-on-cash return can help potential buyers determine how much money they can get out of their down payment when financing the purchase. If you can't afford to make all the necessary repairs, calculate the property's ARV to help potential buyers understand how much the asset will be worth as soon as all maintenance is completed.
Ready to sell your property in Jackson? Get a free estimate and consultation.