Tips for Selling Your Rental Property with Tenants in Place
As real estate markets around the country are booming, many investors are deciding to sell their rental properties. If you decide the time is right to sell, the next step is determining whether selling your rental property with Tenants in place or waiting until they leave is right for you. There are pros and cons to each option, but often the timing is the deciding factor for Landlords.
If you have a month-to-month Lease, then it should be easy to give Tenants proper notice that the Lease is ending and sell the house unoccupied. However, if you have a fixed-term Lease and the Tenants are complying with all terms of the Lease, then you’ll need to either wait for the Lease to expire or sell the home with the Tenants in place.
What Happens When You Sell a Home with Tenants in Residence
If your fixed-term Lease has not yet expired, you can still sell your property. In most states, the Lease and security deposit are simply transferred with the property and the new owner becomes the Landlord.
This means that the Tenants stay in place and all terms of the Lease remain in effect until the Lease period ends. The only change is in the Landlord.
It’s important to note that each state has some unique rules and regulations when it comes to selling a property with Tenants, so it’s important to review all local and state laws to ensure that you’re not violating any Tenant rights when you list and sell your property.
How Do You Sell Your Rental Property with Tenants
Selling a property with Tenants in place creates a unique set of benefits and challenges. If the property is well maintained, you’ll get the benefit of selling a staged house instead of an empty one. Additionally, some investors like the idea of having a Tenant in place and an immediate source of income from the property. And, sometimes you’ll find a buyer that is ready to purchase a home but not yet ready to move. This type of sale is ideal for them!
At the same time, however, selling a rental property with Tenants in place limits your buyer pool. It can also make marketing and showing the property challenging, especially if the Tenants are unhappy about the sale. Finally, in many states, there are specific Tenant rights that Landlords must comply with when selling a property.
Addressing these challenges head-on can help to make the sale go as smoothly as possible.
Understand All Legal Issues and Requirements
The first step for Landlords selling a property with Tenants in place is understanding all legal obligations. Start by looking at the Lease to confirm the tenancy period, notice requirements, and terms regarding showing the property.
It’s best to provide Tenants with a written Notice to Show that provides details about how the process will work. It’s also important to review your state laws to make sure you’re complying with all notice requirements. While 24-hours notice is required in many places, Florida only requires 12 hours notice whereas Alabama, Arizona, Colorado, Delaware, D.C., Rhode Island, and Vermont require 48 hours notice.
To ensure that you’re informed and in compliance with all applicable laws, it’s important to do your research and to talk with local real estate agents or attorneys.
Communicate with Tenants About the Selling Process
Once you’re familiar with the laws and ready to sell your property, the next step is communicating with Tenants. When doing so, it’s helpful to be respectful and informative. Keep in mind, the happier you can keep Tenants during this process, the more smoothly it will all go.
Here are some tips to get the most out of this conversation:
- Meet the Tenant in person to discuss the sale and all details; allow time to answer any questions and provide as much information as possible
- Go over all details and put them in writing, including issues like how much notice is required before showings, periods during the day when showings can happen, and what condition the house should be in for showings
- Consider offering incentives to encourage Tenants to cooperate during the process – for example, reducing rent while the home is on the market or compensating Tenants for the inconvenience of showings
- Let Tenants know that you will be in communication throughout the process and will provide them with the new Landlord’s information after the sale
- Encourage the Tenant to contact you with any questions or concerns
Get Creative to Ensure the Property is Attractive to Buyers
Effectively marketing and showing the property with Tenants in place can be challenging, but it’s important to find a way to do so. Here are some ways you can do this:
- Make showings as easy as possible for Tenants by asking them for times that are most convenient for them
- Ask the Tenant to leave for showings – consider giving the Tenant a gift card to a local restaurant or coffee shop where they can go during showings
- To ensure that the property stays in good condition, hire a yard or cleaning service; this is another way to keep Tenants happy and to make sure the property is ready for showings
- Focus marketing efforts on investors that will see Tenants as a bonus
- In marketing materials, provide information about rental income to help buyers see the potential ROI that the property offers
Know Your Options When Selling Your Rental Property
The above steps should make it as easy as possible for you to sell a rental property with Tenants in place. However, if you have trouble selling it this way or decide that you don’t want to deal with the extra headaches, there are other options even if you have a fixed-term Lease. For example, you could:
- Wait for the Lease term to end
- Offer the Tenant a “cash for keys” deal
- Sell the property to your Tenant
Whatever you decide to do, we’ve got tools to make the process as EZ as possible. Visit ezLandlordForms.com to get all the notices and forms you need.