"Can I sell my rental property with tenants in it?" This is a common question many landlords face at sometime or another. The answer is yes, but it is a bit more complicated than a regular, straightforward sale. The property is yours and you have the right to sell it, but your tenants are an extra variable in the sale that must be considered.
Should I sell my tenant occupied rental or end the lease?
You don’t have to kick your tenants out of the house before you sell it. In fact, it may be illegal to terminate their lease if you don’t have a good cause. If you want the house to be vacant before you sell it, the best thing to do is wait until the lease ends and start the selling process after the tenants move out.
You could also offer the tenants an incentive for moving out early, such as paying for their deposit on their next place or paying the difference between their current rent and average rent on a comparable size property for the remainder of the months on their contract.
If you don’t want to wait until the lease is up or offer an incentive for your tenants to move out sooner, you can also put the house on the market while your tenants are still living in it. You need a good relationship with your tenants for this to work, because an uncooperative tenant can easily prevent a house from selling.
- Have clear communication with your tenants
- Explain that you will not be giving out keys willy-nilly. Prospective buyers will only come to tour the house when accompanied by you or the real estate agent.
- Ask them to keep the house picked up, the beds made, and the dishes out of the sink. Valuables should be hidden, along with anything that might be personal in nature.
- Schedule tours only for certain days, and try to keep mutliple showings within the same time frame (Monday between 1-2 pm, for example). Remember, this is their private space, so try and respect it as best as possible.
- Give your tenants some token of appreciation for their cooperation. Give them a gift certificate for dinner out on an evening when you are going to have an open house, for example.
- Explain to your tenants that they will have ample time to move out when the house does sell, usually 30 days.
Selling when tenants aren’t going to move
Most of the time, it is assumed that tenants are going to move out of the house when the house is sold. However, this is not necessary. You can sell your rental to an investor who wants to continue renting the property out, in which case the terms of the lease will simply transfer over to the new owner. This is a method of selling that offers stability to the tenants and doesn’t require them to move. The only drawback is that you will be more limited in your potential buyers.
Pros and cons of selling your rental property with tenants present
Tenants can actually help your property sell, if they are cooperative. Houses sell best when they look lived in, and your tenants can help prospective buyers envision themselves living there. On the other hand, they can also make the house look terrible and hold up the selling process if they don’t want to move.
Remember that your tenants see your house as their home. Be respectful of them and show you recognize the inconvenience that selling the house causes them. Educate yourself about local tenants’ rights laws. With a good relationship with your tenants, selling your rental house with tenants still living there can be an easy and good experience.