Should Landlords Show Rental Properties Occupied or When the Tenant Leaves?

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Landlords have two choices when they need to rerent property:

1. Wait for the current tenant to move out before showing the unit to prospective tenants.
2. Show the property with the tenant still occupying it.

As one might expect, there are pros and cons to both approaches. Once you learn what they are, you’ll be better able to decide how to handle the situation when it comes up.

Waiting until the tenant vacates

Waiting for a tenant to vacate property is the easiest way to rerent a space. Once the tenant leaves, you can assess what needs to be done to ready the space for a new tenant. You can then get the place in order without needing to notify anyone every time you or your contractor needs to enter the property to work. You can also show the place whenever you like.

But if you wait for the tenant to vacate before showing it, you’ll lose out on at least a month’s rent, depending on how long it takes you to rerent the property. Also, after the tenant vacates, you’ll need to turn on utilities at your own expense. You can’t very well show the place with no electricity, and walking around with a flashlight isn’t the best way to seal a deal with a potential tenant.

Showing an occupied unit

The best reason to show property with a tenant still in it is to help prevent you from losing rent money due to a vacancy. The new tenant can move in right after the current one leaves. The new tenant also puts the utilities in their own name, saving you from that expense as well.

The difficult part about showing an occupied unit is that you can’t be 100% confident that the tenant will keep the place as neat as you would like. In fact, it could be messy, have that “Is there a cat in here?” odor, or have loose animals running around. Also, the current tenant might hang around for the showings, which could be awkward for the prospective tenant and maybe even cause them to leave before they’ve properly viewed the space.

Another con for showing an occupied unit is there are no guarantees the current tenant will leave when the lease is up. This is called being a holdover tenant. If you can’t get this person to leave by the time the new tenant is scheduled to move in, you’ll be breaching your contract with your new tenant. To avoid losing the new tenant, you might need to resort to paying your current tenant to leave.

Six tips to help ensure success when showing an occupied unit

You’ll have a greater chance of things working out if you follow these six tips.

1. Let your current tenant know your plans. Tell them you plan to show the unit starting on X date.
2. Work out a plan that you and your current tenant can both be on board with. Although the property is yours, your tenant has the right to live there undisturbed. But most landlords also have the right (which is stated in most leases) to show the property after giving the tenant reasonable notice, which is usually 24 hours. Check your state’s laws or your lease for how much notice is required in your jurisdiction.
3. Although you can ask your tenant to keep the unit neat, not contain any animals, and leave when a prospective tenant is coming by, you can’t force your tenant to do any of those things. So either be prepared for the worst, or wait for the tenant to vacate if the situation is unfavorable for showings.
4. Sweeten the deal by giving a cooperative tenant a restaurant or grocery store gift certificate. If you plan to be overly intrusive, such as having multiple showings and open houses all month long, you might want to give your tenant some rent abatement. But be smart about it — it’s better to limit the amount of showings when you have a current tenant by combining the showings when possible.
5. Avoid putting out a for-rent sign. Case in point: A renter once told me that when they were renting a house that the landlord decided to sell and advertise with a for-sale sign, someone came over unannounced and asked to look around. The renter told this stranger they couldn’t come in and that they needed to call the agent listed on the sign. A stranger disturbing your tenant is unacceptable. If you must put up a for-rent sign, make sure you include the words “Do Not Disturb Occupants” or “Showing By Appointment Only” on the sign.
6. Don’t allow a real estate agent to put a lockbox on an occupied unit. Because a lockbox is a device that holds a key that anyone with a code can get, it’s unsafe for your tenant and invites illegal pop-up showings.

The Millionacres bottom line

You can be successful either by waiting for your tenant to vacate before showing the unit or showing the property with your tenant still occupying it. If you have a bad tenant situation on your hands, though, such as a hostile tenant or one who has stopped paying rent, you might be better off to wait for that tenant to vacate before showing the property. Assess your situation, and choose wisely.

Source: Millionacres