What You Need To Know About Selling Rental Property Easily

Selling a rental property can be one of the most financially rewarding experiences any real estate professional can encounter in their career. Aside from perhaps residential mansions in Beverly Hills, apartment buildings are commonly sold at prices that exceed residential property prices and therefore generate more commission dollars for both the listing agent and the listed listing agent. bag.

It is not unlikely, for example, that in a market where the median selling price of a home is $ 250,000, a ten-unit apartment building located on one block will sell for two or three times that price. And when you do the math (assuming a six percent commission), even conservatively, the result would be $ 30,000 versus $ 15,000.

Another advantage associated with sell rental property comes in the form of what I will simply call "repeat business profit."

Once you sell a home, it's probably safe to say (barring something irregular like a job transfer or a change in finances) that the buyer is no longer a potential customer for about five years. On the other hand, since it is "real estate investors" who buy profitable properties, you are always faced with the possibility that your client wants to invest in more rental properties; Or under the right circumstances, you may even want to trade an investment property for a larger one.

In other words, when you sell an investment property, you work with investors by association and are therefore always in a position to acquire repeat business and get the benefit of additional commissions.

This was true with the first investment property that I sold to an investor, and in most of the transactions, I was involved in the years after. Real estate investors, by their very nature, are always looking for a property (or other property) that makes them money and this means repeating business for you and earning more commissions as a result.

It's fair enough, but you can't enter the income property field thinking like a residential real estate person. There are a few things you need to understand about the real estate investment protocol to be successful with it.

When selling a rental income property, you must submit the numbers. It is not enough to simply point to the suite bathroom and large walk-in closet because real estate investors are only interested in the bottom line: "How much money does this make for me?"

You need to present the cash flows, rates of return, and profitability figures for each rental property to your investors, otherwise, you might just "hit sand" and miss out. This is not difficult with good real estate investment software.

It's also a good idea to familiarize yourself with some of the essential returns that real estate investors look for in a property when making an investment decision. Otherwise, you will appear less able to work with rental properties and lose credibility with the client. Among other things, learn how to calculate the capitalization rate and cash-over-cash yield and understand the role of an APOD and a proforma income statement.