As a landlord, you must have a solid understanding of the responsibilities involved, especially when selling a rental property. It’s different from a single-family residence. Here are a few tips to make the sales process easier.
Common Reasons for Selling a Houston Rental
- Cash – You want to take advantage of your property’s equity.
- Negative Cash Flow – Cutting any losses and moving away from an underperforming property is a sound strategy.
- Accidental Landlord – You recently inherited property but have no interest in becoming a landlord.
- Absentee Landlord – Managing or owning an out-of-state property is more trouble than it’s worth, and many investors sell their property because of this.
- 1031 Exchange – You would like to complete a like-kind exchange.
- Moving Time – You plan to retire or no longer wish to be a landlord.
7 Tips for Selling a Tenant Occupied House
- Honest, upfront communication is the key. You must provide clear communication of what is happening, and most tenants will understand the situation.
- Be sure all tenants understand they are not being kicked out of the property. There is a chance the buyer will allow them to remain where they are.
- Inform all tenants they have “X” number of days after the contract is signed to move out.
- If you are showing the house to numerous buyers, be sure to notify the tenant prior to arrival. Do not wait until the last minute; it is disrespectful.
- The buyer may want to perform an inspection and appraisal. Alert the tenants beforehand.
- If moving expenses are an issue for your current tenants, offer to reimburse them. You do not need to pay the total cost, but it shows you care.
- The worst-case scenario is a stubborn tenant. You may have to pay them off to leave the premises. Payment may be made in cash, prepared rent, or moving expenses.
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.