Selling Rental Property in Oklahoma
If you own rental property then you probably understand the value behind real estate. We will spare you the details here, but we can both agree it’s a good long-term investment. However, every landlord sells their investments at some point. Maybe they just need cash, maybe they ran out of depreciation, maybe they are just tired of managing tenants and repairs.
We’ve purchased lots of houses and other types of real estate from landlords over the years. Some have just been 1 house at a time deals, others have been multiple units at once. It isn’t always easy to sell a house from one investor to another. We are able to make this work because of a few reasons: 1) we make selling a house or houses EASY, 2) we offer multiple ways for you to get paid, and 3) we aren’t out to steal houses but pay fair prices. We run an honest real estate investment company. We keep it simple and if a price works for us AND works for you…..we follow through.
So what’s the secret to selling rental property without hassle or wasting time on unqualified lowball buyers??? Read on below to see some tips to selling rental property.
1. Know why you are selling
Sounds like an obvious question to ask yourself but it’s a really important one. If you don’t know why you are selling, you are either not ready to sell or might regret it later. Think it through. It only helps to know why you are selling rental property and helps you look at the different exit strategies to see which fits YOUR needs the best. In other words, if you did sell all your rental property or some, what are you doing with the money? Is it going to sit in the bank? Do you have debt to pay off? How much? Do you have upcoming medical bills to pay? Do you need the cash for another investment? These are all important questions to ask yourself and information to share with us. While a lot of times it seems like buying a rental house or property is just business and number (LTV, DSCR, cap rate, etc.)….we view it as more. If us buying your rental property doesn’t help you reach your answer to why you are selling, then maybe you shouldn’t sell just yet.
2. Talk with your CPA
We always urge investors or landlords we buy rental property from to consult their CPA about the tax implications of selling before agreeing to anything. It’s important to know if now is the right time for you to sell or not. This is especially true if you need to sell multiple properties at once. Here are a few case examples of clients we’ve worked with in the past:
- Judy and Kenny – they owned 21 units in OKC, mostly NW OKC. They were both in their 70s and knew they wanted to sell because they wanted to relax and not worry about tenants or houses. They has had a line of credit, mortgage on their personal residence, and mortgages on a few rental properties they wanted paid off. So, their CPA suggested they sell a few, pay off their debt, and wait on the rest. We worked out a deal to buy ALL their rental property at once. However, we only gave them cash for part of the portfolio to start with. This allowed them to pay off their debts and minimize their tax hit. Then, we worked out a plan where we paid them a monthly income for the remaining properties over time and slowly cashed them out of the rest of the properties at a rate of a few each year.
- Jacob – he owned 5 rental houses he wanted to sell and 1031 exchange into another investment. In his mid 40s, Jacob was still going strong. He wasn’t ready to wind down. So, we agreed to buy his 5 units and close on his time-frame so he had plenty of time to find another investment to move the money into delaying any tax hit. We only needed to buy 4 of those properties for it to work for him so we had an agreement to buy the final house a year later.
3. Think about how you want to get paid
Real is such a great investment because of its diverse exit strategies. If you own a house, you can sell it outright for cash, get some cash up front and some over time, rent it to someone, rent it to someone and sell them an option to buy it. You have options. What you need to do is think about those options. This ties back into #1 a little bit because you need to know why you are selling. Here are two ways we typically buy rental property and when you would rely on them as the seller….
- All cash – This is where you just receive a lump sum cash payment for your property. Depending on your situation, you’ll pay taxes on a good amount of this. However, it gives you an immediate pile of money to pay debts, invest somewhere else, or do whatever you want with.
- Some cash now, rest over time – Maybe you have some debts to pay or a mortgage on the house. This is where we pay those debts and/or mortgages, get you some cash in hand, and pay the rest of the price over time with interest. So not only do you get money right away, but you also get interest on the rest of your money increasing the profit you make when you sell.
- Little or no cash now, rest over time – This is for those folks that get how banks make their money. What would you rather have $100,000 now or $100,000 over 15 years at 5% interest? The first option gets you $100,000. The second gets you $142,000. We work out deals like this all the time with people. The interest rate, down payment, and length of payments are all negotiable. The point is, you delay getting all the money up front for a higher profit and less tax burden.
The final word on selling rental property
If you are thinking of selling rental property, we’ll buy it. Whether it is rented or not, in good shape or poor. If you have questions about your specific situation, please call or text us at 405-673-4901. You can also fill out the form below and we’ll contact you within 24 hours.
Our main goal is to find a win-win solution. If we can, great….if not, no worries. Hopefully this page got you thinking a little and helped make a decision. Look forward to talking with you soon about selling rental property in Oklahoma.