Can I Sell My House with Tenants?
How to Sell a Tenant Occupied Rental
Hey there, this is Mike here again and we are actually in the process of buying a duplex in Bucks County, PA and the property is tenant occupied. Recently, I was speaking to another one of my prospective sellers who was asking if they can sell their property if it is in fact tenant occupied? What options do they have when in this situation?
So, for all of you landlords out there and even accidental landlords!
Option 1: Get Your Property Vacant
Your first option is to get your property vacant and then sell it. Once your property is vacant, you can then fix the property up when the tenants move out and then sell it for top dollar to someone who is planning on living in the property rather than trying to sell to another investor or landlord.
You might be asking then, what options do you have to GET your property vacant?
First, you can wait for the lease to expire. If it is month to month, that’s much easier for you since you can just provide the tenants with notice that you don’t plan on renewing the lease next month. How long of notice you have to give them does depend on your area, but as long as you abide by those rules, you can get the property vacant quickly.
If it is a longer term lease, you obviously have to abide by the lease, so you can’t get them out quite as quickly. However, you can offer them cash for keys, which is an option to get them to move to a different property where you pay them to end the lease early. In this situation, go over the paperwork that you have, you can even reach out to me to discuss if you’d like, but I would recommend talking to an attorney if you are thinking of this approach.
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The main goal of this approach, again called cash for keys, is to negotiate terms where you pay for movers or you are paying their down payment or something to that effect to incentivize them to end the lease early.
Selling an Occupied Property
Selling a tenant occupied property obviously is going to have a smaller number of potential buyers because it’s a niche and because it’s an investment. People who are looking to move into a property are most likely not going to be interested in purchasing your property, for somewhat obvious reasons.
Traditionally, when selling a three to four bedroom vacant house, it’s a lot easier to find a huge pool of buyers because it could be a rental potentially. So, some investors may be looking at it, but you also get everyone who is simply looking to move into a nice new home. The pool of buyers is significantly bigger with a vacant property.
Since our situation has a tenant, we are primarily looking to sell to a landlord. Don’t let the smaller pool of buyers dissuade you, I have seen a lot of sellers not be interested in the offers that they’re getting because the only offers are coming from landlords simply looking to make money. Usually, they want rent to be about 1% of the purchase price, which is how you can usually figure out what they will be willing to offer in a traditional way.
Now this works for some sellers, and if that sounds like something you are interested in, cash offers make a ton of sense.
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Creative Seller Options for Selling an Occupied Rental
Not everyone wants to proceed that route and you may think your property is worth more than what you have been offered. That is why we like to make creative financing offers as well. For example, we are buying a duplex in Bucks County right now.
What we’re doing there is buying the property on terms and the landlord will continue to get his monthly cash flow, in fact he will be getting paid more every month as he got a purchase price ABOVE the 1% Rule. So, obviously he’s happy with the purchase price and getting some money up front, plus he doesn’t have to deal with the renters and all of those headaches any more.
Happy seller, happy landlords, happy tenants.
For us when buying under creative financing terms, cash flow is very important. We work with the seller to make sure we come up with a monthly number that makes sense for both of us.
If that sounds like something you would be interested in discussing, please reach out and let me help you out!