Steps To Take When Selling A Tenant-Owned Property
Steps To Take When Selling Property Occupied By Tenants
There’s a lot of advice for landlords on how to buy rental property, but not as much on how to sell property — especially when it’s occupied by renters. You can sell a property when it’s occupied by tenants, but there are certain steps to take to help ensure the process goes smoothly for all sides.
If you’re itching to put a property on the market, here’s what you need to know.
1. Review Your Lease
Chances are, last time you rented the unit, you used your boilerplate lease without a second thought. Before listing your property, you will need to review your lease terms.
If your tenants are on a month-to-month lease, you will need to give them a 30-day notice before you can list the property. If your tenants are on a fixed-term lease, you have three options:
- Pay them to vacate before the lease ends
- Wait for the lease to end
- Sell to an investor — someone else who will run the property as a landlord
2. Talk to Your Tenants
If your tenants are good people who pay the rent on time and who love where they live, they may be hurt when you decide not to renew a lease because you’re selling. Let them know you’re thinking of selling the property. In some cases, your renters may be willing to buy it from you. This would be beneficial to you and them — they get to stay in the property, and you can sell your rental unit without working with (or paying commission to) a real estate agent.
If your renters are month-to-month, all you need to do is give a 30-day notice. Explain why you’re ending the lease to maintain a good relationship with renters.
3. Try a Cash-for-Keys Agreement
If you are interested in paying tenants to vacate, try a cash-for-keys offer. You will offer a sum of money (e.g., three months’ rent) if they leave before the end of the lease. While some renters will not take the offer, others will be happy to get extra cash, leaving you with an unoccupied apartment you can take to market sooner.
4. Show the Property — With Permission
As long as it is not prohibited by the lease, you can show the apartment while your renters are there. You are usually required to give a 24-hour notice when visiting an occupied apartment, so let tenants know at least a day in advance.
While some renters are naturally tidy, others may leave the apartment messy — even if you ask them to keep everything clean. Since a messy interior will turn off potential buyers, you may prefer to wait to show the building until it’s vacant and clean. Or, you may want to reduce the rent if your tenants promise to keep the space clean. If you go that route, create a cleaning checklist so everyone is on the same page about cleaning duties.
While it may not be easy to sell a tenant-occupied property, it can be done with minimal stress on both sides when you follow these tips.