Selling Your Rental Property In A Buyer’s Market

Kansas CityKansas City is currently experiencing a buyer’s market.  Investment property is a little better off.  Certain areas of the city are better than others.  Let me give you a picture of what the investment market in Kansas City currently looks like. 

Below will be a couple sets of numbers for you to take a look at.  One is for Johnson County, Kansas duplexes and the other is for Jackson County, MO duplexes.  Now, the numbers only include duplexes priced for sale between $100,000 and $300,000.  I just figured below $100,000 isn’t usually what my clients are looking for and above $300,000 just isn’t going to be profitable within the parameters I use.

Johnson County, Kansas Duplex Activity
current as of 2.21.2008

Active =    34
Pending =   3
Sold =        52  (within previous 12 months)

Jackson County, Missouri Duplex Activity
current as of 2.21.2008

Active =   147
Pending =    5
Sold =      100  (within previous 12 months)

Right away you should be able to see the market within the market.  Johnson County has about a 7.5 month supply of homes while Jackson County has about a 16.5 month supply of homes.  Further emphasizing that all real estate is local.  And local can be broken down into cities from country, zip codes within the city and sudivision from the zip code.

As a seller of residential investment property in Kansas City you need to know that you are in for some fierce competition.  And while some sellers may think they know that what I see on the market is usually overpriced, under cared for and have crappy tenants. 

Why, I know of a duplex in Overland Park that has been on the market for quite some time and the real estate agent has “motivated seller” on her comments.  Further inquiry discovers that one side has a tenant that isn’t paying any rent because they made improvements to the property and don’t feel they owe rent for some time to come.  The other side unilaterally decided their rent was too high and cut their payment by $200 a month. 

And the seller still wants retail for this Overland Park duplex!!!???!!!

ChecklistThere is no question I could find an investor to take this headache off their hands.  But not at retail.  So what can you do to be sure you can move your Kansas City are investment property if you need to cash out?

Investment Property Selling Tips

  • Price it right.  Know where the price point is for your particular class of investment property (and location) that the next would-be real estate investor will pull the trigger.  This is not the market to “test” the waters.
  • 100% occupancy with quality tenants.  I said quality tenants.  Tenants with good payment history.  Tenants with security deposits.  Tenants with time left on their leases.  Tenants that don’t trash their rentals.
  • Deferred maintenance accounted for in the pricing or repaired before marketing.  Remember, if you milked the property dry by collecting rent and not fixing a thing you will  pay for it on your sales price!  You might be able to get away with that crap during a seller’s market.  But guess what?  This isn’t a seller’s market.
  • Choose the right real estate agent.  I’m not the only one in Kansas City that knows and understand real estate investment property.  (I am, however, the best.   🙂   – Sorry for the ego trip.)  There are several good agents around the city.  But that number doesn’t exceed 10-12 out of the 10,000+ licensed real estate agents around KC.
  • Be prepared to assist with closing costs.  Investors, and that is who will be in the market for your duplex, like to get in with as little cash as possible to maximize their equitable returns. 
  • Be patient.  Do all of this correctly and you should sell inside 4-6 months.  In fact, if you do all this correctly we should sell inside 4-6 weeks going into spring.  But the real estate investor’s credit standards have changed drastically over the last year.  You don’t have to like it.  But it means fewer people are qualified to buy your rental property. 

I’ve used duplexes as the prime examples here.  But the same is true for all investment class real estate whether it be single family homes, apartments or four-plexes. 

You can definitely sell your investment property in this market.  In fact there is a need for quality inventory.  Feel free to give me a call, write me an email or leave a comment if you have any questions or comments. 

10 Comments

Filed under Investment Property, Kansas City Real Estate, Real Estate Investing

10 responses to “Selling Your Rental Property In A Buyer’s Market

  1. Pingback: Real Estate » Selling Your Rental Property In A Buyer’s Market

  2. Chris…this is a really good local post. I wish I could focus on one subject long enough to do the same here in Chicago. I’m just at the picture taking stage now. (BTW…your site has an awesome look, esp graphically.)

  3. Geno – Thank y0u for stopping by. I appreciate your kind words.

  4. Chris-
    Great post. Like Geno, I may have to do a similar post here in Minnesota.

  5. Scott – From what I read Minneapolis and KC are a lot alike. You’re just a heck of a lot colder!!!!

  6. KAREN NELIS

    WONDERING IF IT’S CRITICAL TO HAVE ALL UNITS OCUPPIED WHEN TRYING TO SELL A 3 UNIT RENTAL?

  7. Karen,

    IMO, yes. People buy income property for income. If a unit isn’t producing any income, well…

    I believe it’s better to tell a tenant that you are thinking of selling. Then I offer them a gift certificate to a local restaurant as a peace offering for the inconvenience of getting out of the home for showings.

    Also, I only allow one unit to be shown until there is a contract on the property to keep to a minimum tenant disruption.

    Some people like to leave an empty unit for showings. I am not going to say that’s bad. But a buyer may figure if he has to lease the place out he’d like a “discount” (whatever that is) for the effort.

  8. scott hopper

    I have 2 homes right now that I would like to sell. THey are both currently occupied with leases and good tenants.

  9. Scott, email me at listwithchris@kw.com the details and I will see what you might get.

  10. nice rental property information.

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