Owning rentals can be a great way to build wealth. It can also turn into a second job you never signed up for: late-night repair calls, turnover between tenants, rising insurance and taxes, and the occasional tenant who doesn’t treat the place like home. If you’ve been wondering whether it’s time to sell a rental in Spokane, Coeur d’Alene or the Tri-Cities, this guide can help you think it through.
Signs it may be time to sell
No single factor decides it, but if several of these sound familiar, it’s worth running the numbers.
- The rent no longer covers the costs. If you’re losing money each month once you add up the mortgage, taxes, insurance, repairs and vacancy, the property is costing you, not paying you.
- A big repair is coming. A roof, furnace, sewer line or foundation repair can wipe out years of profit on a single-family rental.
- You have a lot of equity. If the house has gone up in value or the mortgage is mostly paid down, that equity might work harder for you somewhere else.
- The tax benefits are shrinking. Once you’ve used up most of the depreciation on a property, the tax advantages of holding it get smaller. Your CPA can tell you where you stand.
- Problem tenants. Late rent, damage or a tough eviction can make you want out for good.
- The rules keep changing. Washington’s landlord-tenant laws have changed several times in recent years, and keeping up takes time. Idaho has its own rules, and some cities add their own requirements on top of state law.
- Your life has changed. You moved, you’re retiring, you’d rather travel than manage, or you inherited a rental you never wanted.
Your exit options
Hire a property manager
If you like owning the property but not managing it, a property manager can handle tenants, rent collection and repairs for a monthly fee. It won’t fix negative cash flow, and you’ll still make the big decisions, but it can buy you time.
Move into it
If the house suits your family, living in it removes the landlord role entirely. Some owners do this for a few years before selling. Talk to your CPA first, because the tax treatment of a former rental is different from a home you’ve always lived in.
Keep renting until the market suits you
If the house is in good shape and the tenants are reliable, waiting may make sense. Just be honest about the repairs and rule changes you may face while you wait.
List it with an agent
To get top retail price, most rentals need to be vacant, cleaned up and repaired before listing. That can mean giving tenants notice, losing rent while the house is empty, paying for turnover work, and then paying commissions and closing costs on top.
Sell it as-is, with the tenants in place
This is often the simplest path for a tired landlord. Backyard Home Buyers buys rentals with tenants living in them, so you don’t have to end a lease, deal with turnover or fix up the unit. We’ll work with you on how to schedule a walkthrough in a way that respects your tenants. Read more in our guide to selling a house with tenants.
A quick word on taxes
Selling an investment property has tax consequences that a primary home doesn’t. These are the basics to ask your CPA about. This is general information, not tax advice.
Capital gains
When you sell a rental for more than your adjusted cost basis, the profit is generally taxed as a capital gain. How long you’ve owned it, your income and other factors affect the rate.
Depreciation recapture
The depreciation you’ve claimed over the years generally reduces your basis, and part of your gain may be taxed as depreciation recapture. This catches some landlords by surprise, so get an estimate before you decide.
1031 exchange
A 1031 exchange can let you defer taxes by rolling the proceeds into another investment property. The rules are strict: you typically need a qualified intermediary set up before you close, and there are firm deadlines to identify and buy the replacement property. If you’re considering one, line up your CPA and intermediary early. We can work with your timeline when you sell to us.
A simple checklist before you decide
- Add up 12 months of real income and expenses, including vacancies and repairs.
- List any big repairs coming in the next few years.
- Get a payoff statement from your lender.
- Review your leases: end dates, deposits and any notice requirements.
- Ask your CPA to estimate the taxes on a sale, with and without a 1031 exchange.
- Compare a fixed-up listing (after turnover costs, commissions and lost rent) with an as-is offer.
Why landlords sell to us
- We buy as-is, with tenants in place.
- No repairs, no turnover, no fees or commissions, and we pay the closing costs.
- You’ll usually have a fair cash offer within 24 hours.
- We can close in as little as 7 days, or on the date that fits your plans or a 1031 timeline.
We’re a local, family-owned company. Both owners were born and raised in the Inland Northwest, and we’ve done over 500 deals since 2019, including plenty of rentals around Spokane and Spokane Valley, Coeur d’Alene and Post Falls and the Tri-Cities.
If you’re ready to stop being a landlord, or just want to know your options, see how it works or call us at (509) 461-9079.