Selling a home with existing tenants may sound like a complicated and time-consuming proposition. However, there are a few options you can take to make the process as quick and pain free as possible
Reasons to Sell A House with Tenants
There are several reasons why you may want to sell a house that has existing tenants. Some Owner’s may want to cash out while the property has as much value as possible, while others may be looking to cut their losses on a house with negative equity.
There are those who may be looking to retire or enter a new line of work and would like to get out of the landlord business. Others may have inherited the property and have no interest or ability in learning how to become a successful landlord.
Can I Sell A House with Tenants?
Absolutely! In fact, many landlords chose to sell their property while tenants still reside in the home. Depending on the terms of the lease, tenants usually reserve the right to continue living in the house or property even after it is sold.
Additionally, there are advantages for a new Owner to buy a house that has existing tenants that want to continue to stay in the home and a buyer who wants to keep them there. Since the tenants have already been checked out by you, the next owner and landlord knows their payment history as well as their overall dependability.
The new landlord will also be able to avoid leasing costs, vacancies, and other bothersome details that could impact cash flow.
Types of Rental Agreements
A major factor in selling the home is the type of lease the renter has and if you want them to vacate the property once it is sold. A month-to-month lease is the most ideal situation. If the renter is on a month-to-month lease, the owner typically only needs to give a renter 30-60 days’ notice to vacate.
If the renter has a fixed-term lease, the process of selling the home could take much longer. If the renter is abiding by the terms of the lease, they can remain in the home until the lease has expired.
Many leases have early termination clauses. Depending on the language in the lease, the early termination clause can be triggered in several ways. However, you will probably be required to give the renter 60 or 90 days’ notice to vacate.
Dealing with Tenants Who Won’t Leave
Many sellers find themselves in a situation where they have an investor ready to purchase the property, but the potential sale is being held up because your tenant does not want to leave. Here are options in this scenario:
- Pay the Tenant to Leave
If your tenant does not want to leave, you can pay them to do so. A simple way to determine how much you should pay is to take their monthly rent and multiply it by the number of months that are left on the lease. While this is a viable option, it can also be an expensive one so negotiating a lower figure might be useful.
- Offer the Tenant the Property to Purchase
If you have got an extremely stubborn tenant on your hands, you can always offer them the chance to buy the property. They know the home as well as anyone and would likely be thrilled about not having to move anything. Selling to your tenant could also speed up the sale exponentially but there are many details to work out such as price, financing etc..
- Find an Investor who will be Patient
If you have offered the tenant the above options and they still will not move, you can try to find a buyer or investor who is willing to wait until the lease has expired. Some investors may be willing to work out a contract that will be in force once the lease has expired and the tenant has moved out.
Sell A Home with Tenants with Venture One Realty!
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