Can I Sell My Houston Rental Property With Tenants In It?

It’s important to have a solid understanding of what a landlord’s responsibilities are when selling a rental property.  It’s a little different then selling your primary residence but don’t worry we put together a few tips that are easy to follow.

Common Reasons For Selling That Houston Rental

  • Cash is king – You want to cash-in on your property’s equity.
  • Negative cash flow – Cutting your losses and moving on can be a smart strategy.
  • An Accidental Landlord – You woke up one day with a property that you inherited and have no interest in being a landlord.
  • You’re going to be an absentee landlord – Managing or owning a property out of state is even more difficult and most investors sell because of this.
  • 1031 Exchange – You want to do a like kind exchange.
  • Time to move on – You’re retiring or just plain tired of the landlord business.

The reason you sell really doesn’t matter.  What does matter is how are you going to manage the landlord/tenant relationship.  As you know, dealing with tenants can be problematic but we’ve put together a list of tips and answered a few common questions around selling a rental property with tenants in place.

7 Tips for Selling a Tenant Occupied House

  1. Clear communication is key.  You need to be upfront and honest with what is going on.  Most tenants will understand.
  2. Make sure that the tenants understand that they’re not being kicked out and there’s a chance that the buyer will allow them to stay in the home.
  3. Inform the tenants that they will have “X” amount of days after the contract is signed to move out.
  4. If you’re going to show the house to multiple buyers then you’re going to have to notify the tenant prior to any showing.  Don’t wait until the last minute, it’s disrespectful.
  5. More than likely the buyer will want a home inspection and appraisal.  You should let the tenants know that they will also be notified prior to any contractors stopping by.
  6. If moving expenses are the problem, offer to reimburse them.  You don’t have to pay all of the expenses but it shows that you care.
  7. Worst case scenario is a stubborn tenant and you may have to resort to paying them off.  It might be in the form of cash, prepaid rent at another property, or you pay all moving expenses.  This situation isn’t ideal but it’s a lot less costly than an eviction.

Frequently Asked Questions

This one is pretty easy.  All you need to do is give the tenant notice to vacate via mailing or delivering a letter to the tenant 30 days before you’d like them to move.

If you’re worried about having a “reason” for termination then don’t.  You can terminate a month to month lease whenever you decide.  That’s why it’s called a month to month lease.

Of course you can but you’ll probably need to find the right buyer.  Most cash buyers or real estate investment companies understand this type of sale and are more than willing to take over the lease.

Don’t forget to transfer the lease and security deposit over to the new landlord.

**Note – a fixed term lease doesn’t automatically terminate when the property is sold.  Unless you have specific language that calls this out.

There’s lots of creative ways to persuade people but it will pretty much come down to you compensating them.  You can pay them cash after the close, pay for them to move, or even pay their first months rent at a new dwelling.

Absolutely!  By selling to the tenant you’ll save thousands in real estate fees and it should be an easy transition.

Most tenants are broke and they’re going to need a little assistance when it comes to buying a home.  This provides a great opportunity for you if you want to seller finance.  This takes a little more work on your side but the upside is fantastic because you get a great sales price, a down payment, and you receive monthly payments with interest.

To take advantage of owner financing you’ll need to own the property free and clear.