So you're getting ready to sell a rental? Perhaps you want the money, perhaps you want a new property, or perhaps you simply want to get out of the landlording business.
The fact is, selling a rental property isn't always simple, and there's a major difference between selling a vacant house and selling one that's inhabited. Cleaning up an empty home, working with an agent or sales platform, listing it, going through the dance of open houses, and hopefully selling it quickly is very straightforward. Selling a rented home, on the other hand, is a very different issue. You should first go over the lease terms/lease agreement to make sure you know what you're getting into.
Can I sell a rental property with tenants living in it?
Yes, you may sell a rental property that is occupied by renters. The sort of rental agreement you have with your tenants is the most important consideration. One of the most difficult aspects of determining how to sell a tenant-occupied home is the sheer number of variables. Depending on your circumstances, below are a few potential approaches to the selling:
Approaches to Selling a Tenant-Occupied Property
Month-to-month Agreement
If your renter rents on a month-to-month basis, selling an occupied home shouldn't be a problem as long as you provide the tenant with adequate notice.
"Proper notice" means mailing or delivering a letter to your tenant 30 days before you want them out, usually in relation to the rent due date, according to Phan. However, some states, such as New York, may require you to give at least 60 or even 90 days' notice, depending on how long the tenant has lived in the home. "A month-to-month agreement can be terminated without cause, which is why it's termed a 'no cause' termination." It's one of the key advantages of a month-to-month contract." However, keeping your renter informed about any housekeeping steps you need to take (such as preparing for inspections or open houses) may make things run more smoothly.
Each state has its own set of rules and laws governing proper notice, so double-check the guidelines in your region. Click here if you are from Oregon.
Fixed-Term Lease
Your options are more difficult if your renters signed a fixed-term lease.
Longer leases might make it more difficult to sell a tenant-occupied property. Unless your lease includes an early termination provision, your tenant has the right to stay on the property until the lease expires—as long as he or she is paying rent and hasn't broken the terms of the agreement.
The main truth is that a renter who follows the rules and pays on time does not lose the right to call your property their home simply because you wish to sell. It could be better to hold off on selling your tenant-occupied property until the lease has expired.
Overcoming Tenant Complications
But what if in your case, your tenant doesn’t want to go? Here are your options:
Sell to your Tenant
Whether your renter is adamant about staying, see if they are interested in purchasing the property. They may be your greatest bidder if they already know and love the house (and their belongings are already there).
Sell to an Investor
Homebuyers who are looking for their own place are unlikely to wait through a lease arrangement, but you could have more luck selling to another investor. You'll probably be working with a smaller market, and the new landlord or corporation will have to fulfill the tenant's current agreement.
Pay your tenant to vacate
Yes, if you're selling the property for a profit, it seems counter-intuitive. But if you need to sell your rented home quickly, Offer to reimburse the difference multiplied by the number of months left on your tenant's contract if normal rentals are higher than you've been charging. You might also cover the relocation charges or the next security deposit with cash.
The next step after this process is selling your home from prepping the house for sale, the marketing involved, the inspections required, the various types of financing that may or may not work for the buyer, and all of the other details that come with the home selling process but you don’t have to go through another long and gritty process, Ash Creek is here for you to offer an all-cash offer for your home. Close and move out on the date of your choosing. Contact us today.