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What Landlords Need To Know About Selling A Tenant Occupied-Property

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What Landlords Need To Know About Selling A Tenant Occupied-Property

Selling a tenant-occupied property poses its challenges. While all good things must come to an end, as a landlord, you’re locked into a lease agreement with your tenants. You can’t decide to sell the home and tell them to move - they have the right to stay through the lease term.

Does this mean you’ll never sell a tenant-occupied property?

It doesn’t. There are ways to sell it, especially when you use a platform like Roofstock Marketplace, but before you do, you must figure out how you’ll handle the property when you’re ready to list it.

The Types Of Tenants You May Encounter

When you’re ready to sell the home, you’ll need buyers to walk through it and be able to see it unbothered and in its best state. That can be difficult when you have tenants living there who may or may not want to be bothered.

Here’s what you may encounter.

The Tenant Who Doesn’t Want To Cooperate

Some tenants just don’t want to cooperate. They think they’re in their home, and they have a right not to be bothered. Even if they have only a few months left on their lease, they don’t want to deal with people coming into the home to see it. 

If they don’t want to be bothered, you may not be able to count on them to keep the home in good condition. Some may even purposefully make sure the home isn’t in good condition when buyers walk through it. 

If you can prove the tenants are violating the terms of the lease, you may be able to get them out early, but typically it’s best to wait until the lease ends and you have a vacant house to sell.

The Tenant With A Fixed Term Lease

If you have a tenant with a fixed-term lease, you may have to wait until their lease expires. As a courtesy, you can let them know a few months ahead of time that you’re selling the home and won’t renew the lease. This gives them time to look for another home in the meantime.

But, if the lease has many months left on it, you may consider selling the house with the tenants and lease intact using Roofstock Marketplace (more on this option below). Your other option is to wait until they move out, and you can sell the home as a vacant home.

The Tenant With A Month-To-Month Lease

If your tenant has a month-to-month lease, you’re both off the hook should things change. If you decide to sell the property, you only need to give as much notice that you aren’t renewing the lease as the fine print states on your contract.

If you have a good relationship with your tenant, it’s nice to tell them a few months ahead of time, so they have time to find a place to live. If you’re on good terms, you may even be able to show the house to buyers while the tenant lives there.

Getting Your Tenant’s Cooperation When Selling Your Home

If you’re in the situation that you’ll have tenants in the house for a while, you may want his/her cooperation in selling the home.

It’s not as hard as it sounds if you have nice tenants.

The key is to help them while they help you, sort of the ‘I’ll scratch your back and you scratch mine deal.’ 

If you offer your tenant discounted rent during the timeframe you need him/her to show the house, keep it clean, and deal with inspectors and appraisers coming through the home, you may receive more cooperation. 

What If Your Tenants Won’t Cooperate?

If your tenants won’t cooperate and show the home and/or maintain it while they live there, you have a few options.

Ask The Tenant If They Want To Buy The Home

Sometimes our best buyers are right under our noses - the renters. If you know your tenants love living in the home, ask them if they’re interested in buying it. If you give them ‘first dibs,’ they may want to act fast and buy it, especially in today’s competitive market.

Consider this option if you know your tenants are in a good financial situation and can secure financing unless you’re in the position to offer seller financing. This means you’ll hold the property deed, and the buyer pays you rather than the mortgage company.

It’s a more complicated situation than getting bank financing, but if you have the capital to help your tenants, you could sell your home and help them out.

Pay Your Tenants To Leave Early

If waiting for your tenants’ lease to expire isn’t an option (you need to sell it fast), you may consider paying your tenants to leave. What this looks like varies by situation. Some landlords pay the moving expenses, while others pay thousands of dollars to entice tenants to leave, allowing the landlord to fix, list, and sell the home.

Sell The Property With Tenants In It

If the property has a long lease term left and you’ve exhausted your options to get the tenants out, consider selling the property with tenants in it. Otherwise known as a turnkey property, many investors appreciate buying a property with tenants in it because it means instant cash flow and less work to find a new tenant.

Just how does this work? Roofstock Marketplace makes it simple. 

How Roofstock Marketplace Helps Sellers Sell A Tenant-Occupied Property

Roofstock Marketplace is a platform for real estate investors - both buyers and sellers. If you have a property to sell with tenants in it, you can list it on Roofstock and market it to the right audience - other real estate investors.

This is different from selling your home with a real estate agent. Even if you tell the agent the property is a rental and you want to target other real estate investors who may be interested in buying a property already rented, your options would be limited.

With Roofstock Marketplace, the entire audience is investors and people who want to buy a home with renters in it.

Roofstock professionals do a lot of legwork for sellers to help them not only market the property but sell it at the best price possible. At the same time, enticing buyers with the high level of information they offer.

Here’s what Roofstock offers.

Help Pricing The Property

When you submit your listing to Roofstock, the professionals will evaluate the area and the information you provided about the home to come up with a fair price. Ultimately, you set the sales price, but Roofstock professionals offer their expertise to guide you to the right price.

Help With Property Analysis

Real estate investors need a lot more information than primary residence home buyers. They need to know the numbers - the amount of rent, lease start and end date, net cash flow, property valuation, and more. Roofstock provides all this information for investors so they can make an informed decision.

Help Ensuring The Property Is In Good Condition

Roofstock professionals do all the legwork for sellers. They inspect the property, appraise it, and run title work. They provide buyers with all the information they need to make an informed decision, and they lay it all out on their dashboard for anyone to see. They make the home buying process as transparent as possible for real estate investors. 

Support Throughout The Bidding And Closing Process

When you receive offers and choose one for your sale, Roofstock is there for you every step of the way. The entire process goes through Roofstock, taking the stress off you. All communication goes through the platform and supports you to ensure a seamless transaction.

The Benefits Of Selling A Tenant-Occupied Property

Selling a tenant-occupied property offers many benefits for you and the buyer.

Seller Benefits

  • You can sell the property before your tenant’s lease expires. Whether there’s one month or two years left on the lease, you can market and sell the property on Roofstock Marketplace
  • Roofstock provides support from start to finish. You don’t have to do much of the legwork yourself. Your most considerable responsibility is providing the property details, and Roofstock takes the lead from there.
  • You market to the right audience. Using a real estate agent may help you market your home, but not always to the right audience. Unless you work with an agent who networks with only investors, the right people won’t see the home. Most people looking for a primary residence won’t buy a rental home because they think it won’t be well maintained.
  • You earn cash flow until the day you close. You’ll still earn money while you prep the house for sale and go through the sales process. Until the buyer closes on the deal, you keep the rent, but the day the buyer takes possession, the cash flow belongs to him.
  • Roofstock charges half of what real estate agents charge. At just 3% of the sales price, sellers keep the other 3% in their profits. A real estate agent, on the other hand, charges 6%. If you’re talking about a $200,000 home, that’s a difference of $6,000. 

Buyer Benefits

  • Buyers have a large selection of homes to look at. As an investor, it can be hard to wade through the homes for sale. Buyers looking for investment properties want one in an area that’s attractive for renters. If there are already renters in the home, it’s an easy decision.
  • Buyers earn cash flow right away. As soon as the buyers close on the property, they become instant landlords. They don’t have to worry about finding tenants, screening them, or making sure the home is ready for tenants. Everything is ready for them to earn cash right away.
  • Roofstock does most of the legwork. Finding the right investment property means going through a lot of analysis which takes time and effort. If you take too long, you could lose your property, though. Roofstock handles all of the analysis quickly and efficiently so buyers can make an informed decision rather than a guess.
  • Buyers can invest in properties across the country. With tenants already in place and with the due diligence done by Roofstock, buyers can confidently invest in homes halfway across the country sight unseen. 

Selling A Tenant-Occupied Property Can Be Done

It may feel like you’re stuck with your current situation even if you’re ready to sell your investment home. If you have tenants, it feels like the right thing to do to wait until their lease expires, and for many, this is the case.

But, if you’re focused on selling now and don’t mind selling a tenant-occupied property, Roofstock Marketplace can help you sell your home, sometimes as soon as you list it. With their Open House listing, your home gets the ultimate exposure for 24 hours, and you may even receive offers during this time.

Even if you don’t sell the home right away, Roofstock makes it easy to sell homes with tenants in them by marketing to the audience who wants turnkey properties. With the level of work and support they provide, but buyers and sellers win.

Image Sourced from Pixabay

 

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Posted-In: rental properties RoofstockNews Markets Real Estate

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