How to Sell a Rental Property in Atlanta

The rental property market in Georgia continues to be competitive, with quality rental properties selling in as little as 30-60 days. This is still true even with higher interest rates to purchase homes. Seeing what local houses are selling for in the area may cause some landlords to decide to jump on the bandwagon and sell so they can move on to their next investment. But how can you get the most money possible for your property in today’s market? Find out more below.

Why Sell a Rental Property?

Real estate purchases and rental properties are considered a smart investment in today’s economy. This is one of the first times in Georgia that we have seen a stagnation in rising rental rates. The market for rentals isn’t going down but we can see that it has finally slowed down just a touch. With the real estate market still being hot with many areas in desperate need of housing, a rental can be a smart long term (or short term) investment even though rents aren’t soaring up anymore. Even if you decide on the short term investment option, the rate that properties are appreciating in almost every state can still make rental property investing a savvy choice for diversifying your portfolio. But, before you sell, you’ll want to make sure you are handling the transaction in a way that keeps your taxes low and your profit high.

Options When Selling a Rental Property

If you’re looking to sell a rental property in Atlanta or the state of Georgia, it can be as easy as putting up a For Sale sign and listing it on the MLS, or it could be more complicated if you have tenants with a current lease. Depending on your county’s regulations for dealing with an occupied rental, you’ll need to check to make sure that you are up to date with current county, city, and state regulations before listing a property for sale. But you do have options.

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. If you want to sell a rental property in Atlanta, but aren’t quite sure if you should wait or not, contact ATL Cash Home Buyers today. We have an active Realtor who would be happy to lay out your options.

Pay the Tenant to Vacate

Even if this is required by county, city, or Georgia 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. This can also be helpful if you’re looking to sell a rental property in Atlanta and don’t want to wait to sell your home. You can sell with the tenant in place but market that they are willing to leave early and even negotiate that monetary amount in with the new potential buyer.

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. Approaching the tenant first if you want to sell a rental property in Atlanta, is a great way to start!

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! We have sold a rental property with a tenant in place and didn’t allow a showing until we had an active purchase agreement in place. This is kind of unicorn situation but it is definitely achievable to sell a rental property in Atlanta with an active lease in place.

Sell Your House to ATL Cash Home Buyers

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, ATL Cash Home Buyers 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.  So, if you’re looking to sell a rental property in Atlanta, reach out to us today and let’s see if we can find a number that works.

When to Sell a Rental Property in Atlanta? 

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, especially if you purchased prior to 2020. Some clients are seeing as much as a 50% return on their initial investment. It’s no secret that during Covid, home prices started to soar. So, if you purchased at a good time, it may be a great time to sell a rental property in Atlanta.

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. We have been seeing in the Atlanta market that if you aren’t pricing your home correctly, or if you’re in an undesirable area, or if your home has some downfalls to it, it can sit on the market for 60 days or more. So, just make sure you come into the process with realistic expectations.

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 a rental property in Atlanta 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 as of June, 2024. Recently, the FED did lower rates by half a point. This is starting to steer the ship back in the right direction but with the upcoming elections, there is no telling what will happen with the new President’s policy changes.

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 a Rental Property in Atlanta 

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 and the best way to advertise the home.

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! Do your homework and make sure you set realistic expectations. Having a professional real estate agent can definitely help in this matter. Contact ATL Real Estate Services and ask to speak with Chris. He’d be happy to help you navigate this important, yet tricky part of the process.

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

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 an escrow officer to order a title search. If something comes up, take care of it before putting the house up for sale. In most situations, there shouldn’t be a problem with this. However, we recently helped a client that was selling a rental home with tenants in place. The tenant had to be the account holder for Fulton County water and had accrued a very big water bill. This could have put a lien on the home but after proving that the tenant was the holder of the account and not the owner of the home, the mortgage company was able to move past this.

Inform Tenant

Be diplomatic! Most states require landlords to let their existing Tenant(s) know the property will be going up for 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. You can also chat with the tenants to see if they would be open to voiding their lease by receiving an agreed upon amount of cash to help them get into the new place. Regardless, having a conversation with the tenant is very important and should not be overlooked.

Analyze Capital Gains

When you sell a rental property in Atlanta or anywhere in the country for the most part, 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. You should consult with your professional tax advisor in this regard to know what to expect.

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. This can be a somewhat complicated process if you’ve never done it before and most importantly, it’s crucial to identify a new property prior to starting the process. Reach out to a professional to learn more about this process to ensure you take the right steps.