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How To Sell A Rental Property in North Carolina

How to Sell a Rental Property in North Carolina

The real estate market in NC remains highly competitive, with well-maintained rental properties often selling within a month. Observing the current selling prices of similar local properties may prompt some property owners to consider selling to capitalize on the market trend and fund their next real estate venture. To maximize your property’s selling price in the present market conditions, read on for valuable insights.

Why Sell a Rental Property?

Investing in real estate and acquiring rental properties is considered a smart financial move, especially in today’s thriving market. Many regions are experiencing a housing shortage, making rental properties highly profitable for both long-term and short-term investments. Property values are consistently appreciating across most states, enhancing the appeal of rental investments for diversifying portfolios. To maximize returns, it’s essential to manage the transaction in a tax-efficient manner, minimizing liabilities and boosting profitability.

Options When Selling a Rental Property

When it comes to selling a rental property in NC, the process can vary from simply putting up a For Sale sign and listing it on the MLS to dealing with complexities such as existing tenant leases. It is crucial to understand and comply with your county’s regulations regarding the sale of an occupied rental property. Before listing the property for sale, ensure you are well-versed with the current regulations at the county, city, and state levels. Despite the potential challenges, rest assured that there are various avenues available to you.

  • Waiting for the Tenant’s Lease to Expire

If you have the flexibility and can afford to wait, allowing the Tenant’s lease to run its course could present the optimal scenario for selling your rental property. This approach enables you to keep generating monthly rental income while giving you the opportunity to select a suitable real estate agent or a knowledgeable investor with immediate purchasing power. Holding off until the lease ends might help you steer clear of uncomfortable showings with the tenant still in residence or potential complications with a disgruntled tenant obstructing the sale.

  • Pay the Tenant to Vacate

Even if this is required by county, city, or NC 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’ve decided to sell your rental house but you still have an active lease associated with the property, can you still sell? Yes, you can! 

For some investors interested in a rental property to add to their portfolio, your occupied house with an active lease is preferable to one that is vacant and requires the work of finding renters. If your Tenants have a good history that includes a security deposit with their lease, are consistently on time with their rent, and maintain the house and land around it, this is a great selling point for the house’s next investor!

  • Sell Your House to Zack Buys Houses

Sometimes selling an investment property in a non-traditional way can mean less hassle for real estate investors looking to move on to their next investment. If selling your rental for a fair cash price sounds like the right option for you, Zack Buys Houses can help. Make the sale of that unwanted rental property as easy and stress-free as possible. Get a competitive cash offer faster than you could get with a traditional home sale by working with a local house buying company that has built their business by buying houses for cash. 

When to Sell a Rental Property in North Carolina? 

Is there a specific time to sell your rental property? When you feel it’s time to sell! Whether you’re a landlord who is tired of the time it takes to manage their own properties, or you’re ready to cash in on the appreciation of a rental house so that you can move on to a new investment, the best time to sell a rental property is up to you. Sometimes properties take a negative slide, with maintenance costing more than is covered by the rent. Regardless of the reason you are selling, you’ll want to consider the following while trying to decide if now is the right 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

When considering selling your rental property to invest in a new one, it’s crucial to stay informed about mortgage interest rate fluctuations. Higher interest rates can increase the cost of purchasing rental property for investors and lead to reduced demand in the housing market, potentially lowering your selling price. In 2021, the historically low interest rates are a thing of the past, with 30-year fixed mortgages now reaching rates 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 considering selling your property to another investor or passing it on to your tenant or a family looking for their first home? It’s important to identify your target market when selling your property so you can price it effectively and attract the right buyer.

  • Decide on Your Pricing Strategy

When you are ready to sell your rental house, condo, or multifamily 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 the type of buyer that will be interested in your property and your overall sale price!

  • Buyers Inspection and Do Repairs

Maximize your profit when selling your rental property by ensuring a smooth appraisal and buyer’s inspection process. Before listing the property, ensure it is up to code and in market-ready condition. Seek guidance from a seasoned broker and arrange for a pre-buyer inspection to avoid unexpected issues. This proactive approach can save you valuable time on negotiations and unforeseen repairs.

  • Run a Lien Search

Do you still have a mortgage or some sort of financial loan on the property? If so, you most likely also have a lien from the lender against the title. This is only removed when the house sells and the mortgage is paid off at close. However, there might be liens you aren’t aware of. To make sure there are no encumbrances you need to deal with before selling, ask a real estate attorney to order a title search. If something comes up, take care of it before putting the house up for sale.

  • Inform Tenant

Be diplomatic! North Carolina doesn’t require landlords to let their existing Tenant(s) know the property will be going up for sale, but the state does require tenants are given reasonable notice of showings to prospective buyers and that they are informed of a sale . To keep things civilized, let your renters know with as much notice as possible that you will be putting the property up for sale.

Make sure to keep up-to-date on requirements of state and local laws to avoid the hassle of legal clashes due to misunderstandings or a lack of knowledge of the law. Some renters may have previously dealt with their rentals going up for sale, but to others this might be a totally new (and scary) process. Reassure them that the sale will not affect their lease, and that the security deposit will transfer to the new owner.

  • Analyze Capital Gains

When you sell your rental property, you’ll need to pay tax on depreciation recapture and any remaining capital gains. Due to this, many investors hold on to properties longer than they should due to a fear of losing too much profit to the Capital Gains tax. But there are straightforward ways to avoid capital gains. 

While holding on to an investment, owners will often use the depreciation expense to reduce taxable net income. But, when the property is sold, the total expense that was claimed is taxed as regular income up to a rate of 25%. But there is a way around this! The 1031 tax-deferred exchange allows investors to defer paying these taxes on their investment properties by purchasing a replacement property within 180 days of selling.

We Buy Rental Properties – Get Your Offer Today!

The Bottom Line is…

If you own a rental property in North Carolina that you are looking to sell with less hassle and for more money, Zack Buys Houses has a solution. We are a direct house buying company that has built our reputation on buying houses for cash with less stress (and less fees!). Contact us today and get a competitive cash offer for that house or rental property. We buy homes in any condition, and we don’t mind purchasing properties that still have tenants! Even if the house needs upgrades and repairs, we want to make you a fair cash offer today.

‪(704) 769-0141‬