You’ve made the decision to sell your rental property; however, you’ve got one problem: your tenants are still there. While this may seem overly complex, do not worry, this occurs thousands of times each year, and if you approach the sale of your property correctly, you’ll be able to sell your property without drastically disrupting any of the lives of either your tenants or you.
Let’s explain it clearly and in a logical manner.
First Things First — Know Your Legal Obligations
Before you place that sign up indicating your property is available for sale; it is essential to be aware of what you will be held responsible for as a landlord and if there are tenant rights involved. Tenants have certain rights which will not disappear just because there is an interest in selling. As such, you are required by law in many states to provide proper notice prior to showing the property (in most cases, 24 hours or 48 hours). Additionally, if there is an existing lease agreement, the new buyer will be required to honour the same lease agreement. A final reminder is to investigate your local state landlord-tenant laws prior to taking any action.
Talk to Your Tenants Early
This is a step that many Landlords overlook—and it is a massive mistake. You will establish trust with your tenants and eliminate potential friction by having a straightforward conversation with them as soon as possible in the process.
You will need to inform your tenants of the following:
- You are planning on selling the property
- A possible schedule for showing times
- How their lease is going to be handled
Tenants who feel their Landlords treat them respectfully and keep them fully informed will generally be much more willing to cooperate with showing times and will help keep the property looking good. A tenant who is uncooperative and tense can ruin a deal very quickly.
Your Options When Selling With Tenants
You’ve got a few paths here, depending on your situation:
- Sell with the tenant in place
Being able to show an existing tenant already paying rent is a huge benefit and will be favourable to your real estate investor buyer. You have a “turnkey investment” which is ideal for a real estate investor. Keep in mind you can promote the rental income as a selling feature as well.
- Wait for the lease to expire
Consider keeping your rental for a few months after your tenant’s lease expires in order to allow the house to be staged, shown, and sold quickly and easily, with less competition.
- Offer a cash-for-keys deal
Should you require your unit to be vacated sooner, you may wish to consider providing your tenant with a financial incentive for them to vacate early. This is considered a common, legal and frequently viable option if both parties are in agreement.
What Buyers Think About Tenant-Occupied Properties
The truth is that many potential buyers don’t want to buy a property that already has tenants. Owner-occupant type buyers will usually want to buy an empty unit and move right in, so having tenants in place may lessen the number of buyers interested in your property if they are your target audience.
However, the market for investors is quite solid. If you can price your property correctly and target the right investor audience, selling a property with tenants in place can ultimately lead to a successful transaction.
Keeping the Process Smooth
Here are a few helpful suggestions to facilitate a successful sale:
- Be accommodating and flexible in your approach to scheduling showings around your tenant’s availability
- Ensure the property is well maintained as first impressions are very important to prospective buyers
- Keep records of the following items: lease agreement, record of payments and communication made with tenants
- Your approach to this sales process should be courteous and professional following business standards responsible for all parties involved in this transaction.
Ready to Sell? I Buy Houses Winnipeg Can Help
It shouldn’t be stressful to sell a rental property when there are tenants in place. Selling to the right buyer, whether or not your current tenants are cooperating, is key.
I Buy Houses Winnipeg specialises in buying properties like yours in their current condition and with tenants in place. We will make you a fair cash offer without all the hassle of listing your property, waiting for repairs, and staging it.
If you’re ready to get out of the rental business, contact I Buy Houses Winnipeg and see how easy it can be to sell.
FAQs
Can I sell my rental property even if my tenants are still living there?
Definitely, yes! You can still sell your home if you have renters in your home. Just use the correct approach to show your house to potential buyers by contacting your tenants well in advance of the viewing, recognising that they have an active lease, and keep them posted on the sale process. Each day, many landlords sell homes and properties that are still tenant occupied.
Do I have to tell my tenants I’m selling the property?
There are times when you are not legally obligated to provide an advance notice to your tenants regarding the sale; however, it is simply a better way of conducting business to notify them upfront. By providing advance notice to your tenants, you encourage compliance with your schedule for showing the property by keeping them in the loop. After all, no one likes being surprised when it comes to their own home!
What happens to my tenant’s lease when I sell?
The property includes the lease. For example, if a tenant has a signed lease with 6 months to go, the new buyer must continue to honour it. The sale does not eliminate any of the rights of tenants. If the buyer is an investor buyer, this can be a big positive for the buyer because they will inherit an existing tenant and rental income.
Can I force my tenants to leave so I can sell the property?
A tenant cannot be forced to go because of an agreement that was in place with the tenant. Just because you are going to sell and the tenant is in the middle of that lease does not mean that they have to leave. When the lease ends, it is your choice to end the lease or continue the agreement. You may also attempt a “cash-for-keys” arrangement as a way to mutually agree on an amount of money from you (the landlord) to give the tenant as a method of having them leave the rental property prior to the expiration of their lease. Doing this would be very common and agreeable to both the landlord and tenant.
