Selling a House With a Tenant Living There: What Are Your Options?
Are you selling your rental property with a tenant still living in it? If so, you already know that dealing with tenants is a complicated affair. Selling your rental property with tenants adds more complexity to an already elaborate process. The United States has seen surging rental real estate trends surrounding this issue.
Most notably, the ongoing shift to remote working has caused rent growth to shrink in metropolitan areas and skyrocket in suburban markets. In recent years, rents have been growing at a brisk pace due to low rental vacancy rates and an increased demand driven by expensive new home builds. (1) The problem is that selling a house with a tenant can be just as difficult as finding a suitable tenant in the first place. The lease terms, landlord-tenant laws, and state statutes are relevant.
The bar association in your state outlines landlord and tenant rights and responsibilities, such as providing reasonable notice to enter the property unless there is an emergency. Furthermore, even if you have a good relationship with your tenant, he or she will not be as invested in the property as you are. A tenant has no incentive to make the house available or show it in the best condition possible in order to maximize its appeal and, thus, its value. To simplify things for everyone, here are some things to think about and options for selling a house with a tenant to a
we buy houses Tacoma, WA company.
Determine the Best Way to Sell Your Rental Property
When selling a house with tenants, there are varying factors you must consider. Below are the options you can take advantage of.
Wait for the Lease to Expire
If you are on a month-to-month basis or if your lease is set to expire in two or three months, your best bet may be to wait until the lease expires. Although this puts you on the tenant’s schedule, you won’t have to worry about coordinating showings around the tenant or whether the property will be in good condition. Simply provide proper notice to the tenant 30 days prior to the move. You should also make any reasonable accommodations or incentives available to the tenant, such as returning the security deposit sooner or in full.
Sell the House with the Tenant Living There
You’ll need the tenant’s cooperation to sell the house to a we buy houses in Tacoma company if the lease is fixed for another 60 or 90 days. Make sure they keep the property looking presentable and agree to leave within 24 hours of showings, so they aren’t in the way of potential buyers. You can offer the tenant an incentive, such as a refund of the security deposit. You should also inform the tenant that he must be somewhere else during the home appraisal and inspection appointments.
Taking over an existing lease, on the other hand, is a difficult situation. Buying an investment property with existing tenants means you’ll have instant cash flow. On the other hand, cash home buyers in Tacoma may be wary of relying on the previous landlord’s screening process and the terms of the current lease. If the previous landlords did not raise the rent every year or did not conduct regular seasonal inspections, your new tenants may object to the steps you must make to protect your rental property.
Discuss with your real estate agent what to include as a “condition of sale,” such as refunding the full deposit to the tenant when the lease expires.
Ask Your Tenant to Buy the Property
Instead of selling your home to a, we buy houses Tacoma company; you can ask your tenant if he’s interested in buying it. If your tenant has lived in your rental for years without any problems, he or she may be a good buyer. After all, they are familiar with the house and have already moved in. Offering a tenant the opportunity to purchase your property saves you the time and expense of listing, staging, and showing it.
You should consider hiring a home inspector to identify any unknown issues. A real estate agent is still required to draft the purchase agreement and close the sale, but the agent isn’t as involved as in a regular sale.
Consider a Special Arrangement with the Tenant
As long as a tenant is dependable and does not violate any lease terms, he or she will most likely be able to live on the property until the lease expires. However, if your tenant has been unsatisfactory and has violated the lease terms, you may be able to terminate the lease early. Some common reasons include failing to pay rent (or paying late regularly), damaging the property, becoming a nuisance to neighbors, or engaging in illegal activity on the property.
If your lease does not have a clause that allows you to terminate it, you can still offer a clean slate to potential buyers by incentivizing your tenants to leave early.
As a landlord, you can offer a sum of money in exchange for the apartment being vacated within a certain time frame. However, if you and your tenants have been friendly, there is no need to frame it in this manner. You can offer a rent reduction, assistance with moving costs, or cover their next security deposit in exchange for leaving a little earlier, keeping the house clean, and accommodating showings.
Endnote
Selling your home with a tenant living there can be a complex process because you must consider the lease terms. For instance, you must provide a notice a month before the moving date. However, there are different ways you can still sell your home with a tenant living in it. For instance, you can wait until the lease expires to sell it or offer an opportunity to your tenant to buy it.
All the other alternatives you can utilize are highlighted above, and you can pick one depending on your specific situation.
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About the author
Justin Baker
Justin Baker is the founder of Jay Primrose Properties, a leading cash home buying company based in Tacoma, WA. With a passion for real estate investing, Justin has helped numerous homeowners in the Pacific Northwest region sell their homes quickly and hassle-free. Justin believes that buying and selling real estate should be a seamless process and works tirelessly to ensure that his clients have a stress-free experience. With a deep understanding of the local real estate market and a commitment to exceptional customer service, Justin has established himself as a trusted and reliable cash home buyer in Tacoma and the surrounding areas.
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