Updated over 5 years ago on . Most recent reply
ROI and ROE - how to move on
Hi - I am listning to David Greens book on long- distance Real Estate investing. He says when calculating your BTL' s ROE instead of only the ROI when you have owned it for a while and it has appreciated. You should consider selling and bring your Equity to another market with lower prices and get more worth for your freed equity. I get that.
What I don’t know is how you get the renting tenants out of your property. How long time’s notice do they normally have?
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@Colette Albright I’ve successfully sold 3 of my properties this year and tenants agreed to terminate the lease early. Let me explain - first and foremost I had a great relationship with my tenants - this is key. I informed them that I had the intention of selling. I offered them an incentive (e.g. $1000 towards moving expenses - what I could do with the equity was much higher value to me than the incentive) if they chose to move. Tenants generally don’t want to bothered with showings and new landlord / landlady and appreciated the heads up. I made the move out as easy as possible for them - gave them enough time to find a new place etc.
A word of caution - some expenses to consider:
1. once they move, you return their last months rent (if you’ve had it), security deposit etc, also have closing costs, realtor commissions etc.
2. Plus there’s the additional expense of the incentive.
3. Also, it costs money to update the property so it is ready for sale.
4. Lastly, there’s mortgage payments while it’s up for sale.
5. Actually, one more thing - don’t forget capital gains tax if you’re not doing a 1031 exchange.