SELLING A HOUSE WITH TENANTS
The article discusses the pros and cons of selling a house with tenants. It outlines three ways to sell – selling to an investor, selling to a real estate investment company, or selling to an individual. Selling to an investor is the easiest option, but finding one can be a challenge. Selling to a real estate investment company is the most attractive option, as it offers a range of benefits, including a fast sale and a competitive price. Further, selling to an individual is also a possibility, but this option may not be as advantageous as the others.
Can I sell my home even though I have a lease agreement in place with a tenant?
Rental property is a good investment. On the one hand, it will generate a steady income with minimum effort on your side. On the other hand, any real estate will become more expensive as time goes on, so you’ll eventually be able to sell your property at a much higher price. With that said, a rented house should still be regularly maintained, and the rent price is subject to change depending on many factors outside of your control. We’ve seen that the average rent price hasn’t increased much in recent years. Yet, the value of any real estate has increased drastically across Texas, most notably in and around the major cities like Dallas, San Antonio, Austin, and Houston. Now would be a good time to sell your rental property, but can you sell while the rent or lease agreement is still active?
There could be many reasons why you would consider selling a property you rent to another person. You may need the money now or are no longer interested in long-term investment. The prices for real estate in Texas are on the rise, and if you are not satisfied with the rent you’re getting, it may be a smart move to sell the house now. Another reason could be that you are not happy with your current tenant but are locked in a long-form rent agreement or simply don’t want to deal with renters altogether.
No matter the reason, know that you can sell your house even if you have an active lease agreement in place with a tenant. Depending on a buyer, it can even be beneficial to sell an occupied property. However, for most buyers, it will be a deterrent. In general, selling a property that you rent is more challenging as you need to carefully balance your own interests as a seller, the specifics of local law, and the renter’s rights under the lease or rental agreement.
Month-to-Month Rental Agreement
Selling without a tenant opens up more possibilities for you. If there is an option to wait until the lease expires, you should do so. It’s especially true if you are in a month-to-month agreement. It would be wise to inform the person you are renting to of your intentions to sell the property in such a case. You should do so in a month or two in advance to give them time to find the next place to live in. After the contract is expired and the tenant is gone, you’ll be able to sell your property in any way you like.
If you plan to target buyers who would like to live in the house or those simply looking for a vacant house, then concluding the deal after the lease or rental contract has ended is the only option. Of course, you can always start looking for a buyer before that and even do showings if you can reach an agreement with a tenant. If you are dealing with a cooperative tenant, you can ask them to keep the house in a presentable condition for their last month of living in it and schedule showing at a convenient time. You can compensate the tenant’s efforts by lowering the rent price for this period. However, we are talking about an ideal scenario that seldom works out perfectly in real life.
Waiting till the contract expires opens up a possibility to do some renovations to increase the value of your property. This implies that you won’t be renting for a whole period of renovations and selling process and should consider if it will be worth it in the end. If the house is in poor condition, you should definitely repair it, or no one will be interested in it! But if your property was well-maintained over the years, you might skip the renovations and save some time.
Fixed Long-Term Lease Agreement
Are you locked into a long-term lease? This situation will be a bit harder to resolve but not impossible. You still have plenty of options to consider. Waiting till the lease expires might be a possibility if you are willing to postpone the sale. Selling a vacant house is much easier overall. If you plan to sell as soon as possible, you might look into terminating the lease. Some of the valid reasons for lease termination are:
- Irregular rent payment
- Failing to pay in general
- Unauthorized subleasing
- Failing to comply with the no-pet clause
- Incorrect information in the rental application
- Quarrels with the neighbors
- Illegal activities on the property
- Severely damaging the property
You can terminate the agreement after giving proper notice to your tenant If any of these conditions are met. If you are dealing with a good tenant who doesn’t break the rules, then consider negotiating with them about leaving the property sooner by offering some benefits:
- Help them find a new place to rent according to their preferences.
- If the renting price is higher than what they were paying you, consider compensating the difference for several months.
- Offer help with moving out or compensate for their moving expenses.
- Think about covering the rent for the first month as well as a security deposit.
If you’ve reached an agreement and the tenant left the house, you’ll be able to do some repairs and increase the value of your property up to 20% in some cases. Then you’ll be free to list your house and open it for showings.
You can sell with an agent who’ll ask for about 6% of the money that you’ll receive after the deal is made or go For Sale By Owner (FSBO) and try to sell by yourself. A good agent will be able to sell your house within a month or two. He even slightly increase the value of your home. Most importantly, the realtor will take care of showings, negotiations, represent you during “bidding wars” and help you with the paperwork.
By selling yourself, you’ll be able to save some money. However, you’ll have to take care of the entirety of the marketing and selling process yourself. Listing a property on popular real estate websites will cost you some money. All the showings, negotiations, and paperwork are also solely on you. The benefit of this way of selling is that you’ll be able to sell a bit quicker. You can expect to sell within two weeks or up to a month if you’ll do everything right.
Finally, don’t forget to give your tenant an opportunity to buy the property they currently rent. They will be well familiar with their current home and may be willing to stay there indefinitely. Selling a rental property to tenants is a great option. If the tenant wants to buy the house but doesn’t quite have the money to do so right now, you may consider offering them a seller financing arrangement. It involves you lending the money to your tenant short-term for them to purchase your property. Do that only if you are on good terms with your tenants. Also, you are willing to receive the money for your property later.
Selling Rental Property to the Investor
You can always avoid terminating the rental or lease agreement, be it month-to-month or long-term, by selling the house to an investor willing to continue renting the property to the current tenant. Finding such an investor is possible. But remember that you are dealing with a much smaller market in this situation, and finding the right buyer could take some time.
Selling a house with tenants may be the best option for you. If you find an investor willing to buy your property, you should notify the tenants about the change in ownership beforehand. After the deal, their contract will remain intact and simply rearrang to include a new owner as a landlord. Selling to an investor is one of the most accessible solutions, yet finding one is quite challenging and time-consuming.
Selling a Rental Property With or Without Tenants to West Richards Properties
We’ve established that selling to an investor is the easiest way of selling your property with tenants but finding one takes effort. Another option should be the most attractive to you – selling to a real estate investment company!
West Richards Properties is a cash buyer of homes in Texas and an established real estate investor. Consider selling your house with tenants directly to us. You can count on a range of benefits if you make a deal with West Richards:
- With or without tenants. You can sell your rental property no matter whether it’s currently occupied or not.
- We’ll buy fast. We have the money from our own investors to buy your property right now. We can do so within only a couple of days. Call us, arrange the showing, and receive the deal!
- Any condition. Our company will buy any house no matter its condition. There is no need for repairs or renovations.
- Competitive deal. We’ll pay you a competitive market price and make all necessary arrangements ourselves.
As you can see, selling a home with or without tenants is easier than ever with West Richards Properties. With us, you’ll be able to get money for your rental property right away. You won’t deal with agents, listings, repairs, or tenants. We’ll take care of everything! Sell your rental property to West Richards Properties!