I work out of a Property Management firm in Tampa. I help quite a few investors sell their rental properties when they are ready to offload. I also help quite a few new and experienced investors purchase rental properties. I see many mistakes and have made some myself. Consider the following before selling your rental property... it could mean earning tens of thousands more and saving yourself from headaches during the sales process.

I consistently see so many mistakes sellers make when they're ready to sell their property. Whether its a condo, SFH, or 2-4plex, using the following points will help you maximize your proceeds and make your life a lot easier during the sales process. Most of these need to be planned out months to a year in advance, so if you are forced to sell on short notice, it's probably not the end of the world.

1. Don't list during the middle of the lease

The most important one. No more are the days where a hedge fund will pay CASH over ask for your rental property, tenant occupied at $200 a month. If your tenant has 4 months left on their lease, you're losing an entire buyer pool.

This is a big no-no for single families, condos, and townhomes. Home buyers have been the majority of purchasers of previous rental properties lately, and they can pay more than an investor if the property is in average shape and especially if the property is renovated. Owner occupant buyers will not want to deal with a tenant! Even a month to month tenant will dissuade them from viewing. Having your property manager send a non-renewal to the tenants will allow you to get all repairs and touchups done 2-3 weeks after they vacate, and you can list your property beautifully empty for top dollar.

Over time, 2-4plex properties tend to have long term, under-market rent leases. If you are considering selling, don't renew another full year lease! Either non-renew or let tenants go month to month. Since multifamily properties are mostly purchased by investors, the tenant situation is a little more flexible, but think about this example -- The tenants are paying $800 a month in rent when the market rate is 1200. The owner renews the leases at 850/mo. The owner has been thinking about selling and decides to go at 250k. A buyer likes the price of the duplex at 250k, but then sees he's going to be locked in -$700 a month due to the super low rents. A rent credit is negotiated and given to the buyer at closing for 8.4k to make up for the loss in rent ($700x12 months). The seller loses an instant 8.4k when he put his signature on the renewal leases. Now apply that to a quadplex and you double the issue to nearly 17k off the purchase price.

While rent credits at closing sound like an easy fix, you may be looking at much MORE than 8.4k off the duplex in a normal negotiation since renovation work will be halted, perhaps interest rates will be much higher in a year for refi, and who knows if additional damage to the property will be sustained by inherited tenants over the following year.

2. If you have to list a rental property tenant-occupied, find an agent who knows rental properties

It's almost an out-of-body experience when I find a MLS listing that clearly states the current rents, lease end dates, whether or not utilities are split and if the owner pays any of them, age of roof and HVAC, if there are laundry hookups in-unit, central ac or window units, etc. Having all this information and more readily available in the realtors notes in the listing will show you're a professional who knows these details are important, allow for quicker analysis and offers by buyers, and avoid any confusion after accepting an offer if some details were misunderstood over a text or phone call.

3. If you're self-managing, considering signing up with a property manager a few months before listing

It may seem counter-intuitive to do so right before selling, but property managers can help to organize and package your investment up nicely within a few months. Packaging up month to month leases, rent roll/ledgers that are professional and organized will go a long way. PMs can also assist with collecting rents, sending nonrenewal notices, or negotiating increased rents. Interior inspections can be performed to identify what work should be done prior to listing.

Tampa, Florida

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