How to Sell a Rental Property in Oklahoma

The rental property scene in Oklahoma is still very competitive, with great rental homes being sold in just 30 days. As landlords notice the selling prices of nearby houses, some may consider selling their own properties to invest elsewhere. So, how can you maximize your profits from your property in today’s market? Read on to discover more.

Why Sell a Rental Property?

Buying real estate and owning rental properties is seen as a smart way to invest today. The real estate market is booming, and many places are in need of more homes, making rentals a good choice for both long-term and short-term investment. Even if you’re thinking about a quick sale, property values are rising nearly everywhere, which means investing in rental properties can be a clever way to add variety to your investment portfolio. Before you go ahead with selling, though, it’s important to manage the deal wisely to keep your taxes low and your profits high.

Options When Selling a Rental Property

Putting your rental property up for sale in Oklahoma might seem as simple as slapping a For Sale sign on the lawn and posting it on the MLS. However, things can get tricky if you have tenants who are still living there under a lease. It’s important to understand your county’s rules about selling an occupied rental. Make sure you know the latest county, city, and state laws before you decide to list your property. Thankfully, there are several options available to you.

Waiting for the Tenant’s Lease to Expire

If you’re in no rush and have time, waiting for the Tenant’s lease to expire might be your best option for the sale of that rental property. Not only will you be able to continue to collect your monthly rental revenue, but you’ll have time to find the right real estate agent to sell your home or a savvy investor that has cash in-hand and is ready to buy right now. Waiting for the lease to expire may also allow you to avoid dealing with awkward showings while the renter is still in the property, or an angry Tenant who decides to take steps to not allow the sale of the home.

Pay the Tenant to Vacate

Even if this is required by county, city, or Oklahoma law, offering cash to your renter(s) to break their lease and/or move is a fast and straightforward option for getting a Tenant out of the home. Not only that, but paying cash to vacate your rental property can be beneficial to both you and your Tenant. In these situations, a landlord and their Tenant(s) come to a monetary agreement that allows for the lease to be broken with no legal repercussions. This is a win-win for both parties; you get to put the rental for sale on the date of your choice and your renters have a cushion for moving on to their next home.

Sell the Property to Your Tenant

Maybe you’ve grown tired of owning a house that is aging and needs expensive maintenance and repairs you don’t have the time, energy, or funds to complete. Or perhaps you’ve decided to move on to your next investment but you’d like to see the rental property stay in the hands of someone you trust. That’s when selling the property directly to the current occupants of the house might be a great option! Whether it’s done as a traditional home sale or as a lease-to-own situation, you’ll no longer have to deal with the hassle of that unwanted rental property while still profiting from any appreciation on the property during the time you owned and managed it.

Sell the Property with an Active Lease

If you want to sell your rental home but still have a lease on it, you can absolutely do so!

Many investors looking to grow their rental property collection actually prefer a house that is already occupied. This is much better than a vacant property, which requires time and effort to find new tenants. If your current tenants have a solid rental history, have paid their security deposit, regularly pay rent on time, and take good care of the property, these are all excellent reasons to attract the next buyer!

Sell Your House to North Gate Equity

When it comes to selling an investment property, using a non-traditional method can save a lot of time and effort for real estate investors eager to shift to their next project. If you think selling your rental for a fair cash amount is the best choice, North Gate Equity is here to assist you. We aim to make selling your unwanted rental property simple and hassle-free. You can receive a competitive cash offer much quicker than with a typical home sale by partnering with a local home buying company that specializes in cash purchases.

When to Sell a Rental Property in Oklahoma? 

Are you wondering when the right time is to sell your rental property? The answer is simple: it’s when you decide! Whether you’re a landlord who is fed up with managing properties or you want to take advantage of the value increase in your rental home to invest elsewhere, the timing is all yours. Sometimes, a property may start to lose value, and the upkeep costs could exceed what you earn in rent. No matter your reason for selling, here are some important things to think about as you figure out if now is the best time to sell:

Equity Level is High on the Rental Property

New data by the Federal Reserve shows that the national median home price has risen 42% since January 2020*. If you are looking to invest in new properties or would like to diversify your investment portfolio, now might be a good time to turn that home equity into cash while home prices remain high.

Housing Demand is Strong 

Whether you’ve heard it online, on the news, or in your local paper, despite inflation the demand for housing is still exceeding the supply for homes in cities and suburbs all across America. Realtor.com’s June 2023 Housing Report shows that homes are selling fast amid the continued inventory crunch. For the month of June, the total number of unsold homes, including homes that are under contract, decreased by 4.6% compared to last year. With 25.7% fewer homes newly listed for sale compared to last year, it’s no surprise most homes spent only 44 days on the market.

Market Dynamics are Changing

Also included on the Realtor.com housing report was that the median price of homes for sale decreased by -0.9% annually in June, which is the first decline seen in the data trend history since 2017. Does this mean investors that want to make a profit from their property should panic? Not necessarily. Estimates are modest for any possible downturn in housing prices over the next few years. Realtor.com noted that by the end of the month, inventory had actually declined for the first time since April 2022. But there may be other factors at play in your area. With many cities experiencing an influx of new construction, you might be finding it harder to rent.

Rising Interest Rates

If you are ready to sell your rental property and want to invest in your next property, be sure to keep an eye on those mortgage interest rate changes! Rising interest rates can make buying rental property more expensive for investors, as well as causing less demand in the housing market which could drive your selling price down. 2021’s extremely low interest rates have passed, with a 30-year fixed mortgage now as high as 7.8% for homeowners. 

Property Needs Repairs – High Maintenance Costs 

The years have passed and you’ve had more than one tenant using (and sometimes abusing) that rental property you bought brand new. Investors with houses, condos, and other types of property that have maintenance and repair bills adding up for those necessary upgrades may find it makes more financial sense to sell. A replacement water heater, a new roof, or an overhaul of the HVAC system can add up quickly, pinching your bottom line. Look over the numbers and see if selling at a slightly lower price may keep you from losing even more money to that rental property money pit.

Steps to Take Before Selling Your Rental Property 

Identify Target Buyer

Are you looking to sell to another investor? Would you prefer to pass your rental property on to your Tenant or a family looking for their first home? When you decide to sell, you’ll want to know who your target market should be. Once you identify your target buyer, you’ll know how to price the property for sale.

Decide on Your Pricing Strategy

When you are ready to sell your rental house, condo, or property, you’ll need to focus on your overall objective. Do you have time to wait and are looking to get the biggest profit possible? Would you prefer to sell quickly and with little to no hassle? Will you be able to sell the home vacated or will there be an active lease on the property? All of these things can affect your overall sale price!

Buyers Inspection and Do Repairs

If you are looking to make as much profit as possible with the sale of your rental property, you’ll want to make sure your appraisal and buyer’s inspection doesn’t turn up anything unexpected. Before you list the property, make sure everything is up to code and the property is “market ready”. Consult with an experienced broker and order a pre-buyer inspection. This could save you hours of time on negotiation and repairs you had no idea you needed.

Run a Lien Search

If you have a mortgage or any kind of loan on your home, there’s a good chance that the lender has a lien on your property. This lien will go away only when you sell the house and pay off the mortgage during closing. However, there could be other liens you don’t know about. To be sure there are no issues that could affect your sale, ask an escrow officer to do a title search for you. If any problems show up, make sure to handle them before you list your house for sale.

Inform Tenant

Be polite! Many states require landlords to inform their current Tenant(s) that the property will be listed for sale. To keep things friendly, give your renters as much notice as you can that you’re planning to sell the property. 

Stay updated on state and local laws to avoid any legal problems that can arise from misunderstandings or not knowing the rules. Some renters may have experienced their homes being sold before, but for others, this may be a brand-new (and possibly frightening) experience. Assure them that their lease will stay the same and that their security deposit will go to the new owner.

Analyze Capital Gains

When you decide to sell your rental property, you must consider taxes on depreciation recapture and any capital gains you have. Because of this, many investors keep their properties longer than necessary, worried they might lose too much profit to Capital Gains tax. Fortunately, there are simple strategies to help avoid these taxes.

While owning an investment property, many owners take advantage of depreciation to lower their taxable income. However, once the property is sold, the total depreciation claimed is taxed as regular income, which can be as high as 25%. But there’s good news! With a 1031 tax-deferred exchange, investors can postpone these taxes by buying a new property within 180 days after selling their current one.