If you're thinking about selling your rental property in Akron, Ohio, you're not alone. The city has become a hot spot for real estate investors in recent years thanks to its relatively affordable home prices and solid fundamentals.
Akron is experiencing job growth as the economy continues to recover from the pandemic (BLS). Home prices in Akron have increased by nearly 80% over the past five years, as sellers turn their accumulated equity into cash (Zillow). Rents in the Akron metropolitan area have increased every year, a pattern that all real estate buyers are seeking (Zumper).
Considering that 45% of the city’s households live in rented housing, it’s no surprise that there’s strong demand for rental properties in Akron from real estate investors who are always on the lookout for new opportunities.
When you sell a rental property, you're likely to receive multiple qualifying offers from investors looking to buy it. However, if you want to sell quickly and for the right price, it's important to understand all of your options for selling a rental property in the greater Akron area before you hit the market.
Options for Selling Rental Property in Akron
Selling a rental property in Akron with current tenants can be a tricky proposition. On the one hand, you may be able to sell the property for more than you would if it was vacant. On the other hand, you'll have to deal with the hassle of finding a new place for your tenants to live. Whichever approach you take, you'll need to keep two things in mind:
Review your current lease to see if there is a way you can legally evict your tenant early. For example, your tenant may be consistently late with their rent payments or neglect to maintain the property. Be aware of Ohio's landlord-tenant laws. These laws vary from state to state, so it is important to understand them before taking action.
If you own a rental property, you have a few options for selling it. You can sell it with tenants in it, or you can find a way to get tenants out early and sell it vacant.
1. Sell to a tenant
Selling a rental property to an existing tenant has several advantages. It eliminates the need to list the property on the local MLS, saving considerable time and money. Additionally, landlords can sell directly to buyers who are already familiar with the property, simplifying and speeding up the selling process.
However, it is important to ensure that the borrower-buyer is pre-approved for a mortgage before agreeing to sell the property. Additionally, using a proper purchase agreement when selling a property protects both the buyer and seller if any unforeseen issues arise.
2. Pay the tenant for an early move-out fee
Paying cash in exchange for the keys is a popular option, offering your tenant an incentive to leave the property in good condition and move out on a specified date in exchange for a cash payment. The exact amount depends on a number of factors, but as a general guideline, you should expect to pay one to two months' rent.
This approach has several advantages: First, it allows you to make any necessary repairs or upgrades without having to work around your tenants' schedules, maximizing your selling price, and it also allows you to start marketing the property sooner, which may ultimately sell it faster.
3. Wait until the lease expires
If you are trying to sell your home but your tenant doesn't want to move out early, you may have to wait until the end of the lease. This can be risky, as market conditions may change in the meantime, making it more difficult to sell.
You should also respect your tenant's rights by notifying them of the property before the viewing, but there is always the risk that they may try to sabotage the viewing by not taking care of the home properly. So, while it is certainly possible to wait to sell until the lease expires, it is not always the best decision.
4. Sell with tenants present
Many Akron property owners who are selling rental properties use online listing platforms like Roofstock because it's easy to sell your home with tenants still in it, saving you the time and money you would otherwise spend trying to convince tenants to move out.
Receive ongoing rental income right up until the day the deal closes to maximize your return on investment (ROI). Access a broader global network of qualified real estate investors with Roofstock, rather than being limited to your local MLS. Pay competitive real estate commissions to ensure you keep more of your profits. By researching the Roofstock marketplace, you can see what other rental properties in Akron are selling for and get an edge over the competition.
What to do before selling your rental property
There are a few things you can do to prepare for the sale that will not only make the selling process easier, but also help you get a better price for your property.
Put together a buyer package. This package should include important documents such as copies of lease agreements and tenant rent ledgers, financial reports such as income statements, a list of vendors and maintenance history, and a summary of all capital repairs and improvements made over the past few years. Conduct a pre-sale inspection. This inspection will identify any issues with the property that need to be addressed before you put it on the market. Addressing these issues up front will show potential buyers that you are serious about selling a quality property. If you have tenants living in your rental property, it is important to explain that the property is for sale and how the transfer will work. Tenants may be worried about having to move if the property is sold, so it is important to reassure them that they will be protected by law. Before you put your rental property on the market, calculate potential capital gains taxes and look into 1031 tax-deferred exchanges. 1031 exchanges allow investors to defer paying capital gains taxes on the sale of an investment property by reinvesting the proceeds from the sale of the investment property into other similar investment properties in the United States.
How to Price Your Investment Property for Sale in Akron
When determining the selling price of your rental property, you want to find the sweet spot between a competitive price per square foot and a price that will attract buyers looking for a great investment. There are three main metrics buyers will look at:
Cap rate is a measure of a property's potential return on investment. To calculate it, divide the NOI by the purchase price. The higher the cap rate, the higher the potential return on investment, so buyers may be willing to pay more for a property with a higher cap rate. Cash-on-cash return measures a property's ability to generate cash flow. Simply divide the annual pre-tax cash flow by the total amount invested in the property. The higher the cash-on-cash return, the more cash flow you will have, making it a more attractive investment for buyers. After-Renovation Value (ARV) is the estimated market value of a property after repairs and renovations are completed. The higher the ARV, the more potential profits for buyers and the more attractive the property will be.
Understanding these key metrics will help you price your property to sell quickly and at a fair price. Get started by receiving a free property price quote and consultation.