There could be any number of reasons why you might want to sell a rental property for a house that you own but other tenants live in. You might want to turn that investment into cash. You might want to get out because the property isn’t performing as well as you’d hoped. You might have inherited the property and don’t have any interest in being a landlord. You could be moving and aren’t interested in a long-term relationship with tenants. You may want to trade the property in via a 1031 exchange. Or you might simply want to get out of the landlord game.
Whatever the reason, these decisions sometimes happen quick. So much so that you might want to sell while you’ve still got tenants living in your properties. You don’t have to wait until every lease expires in order to sell. Here are six tips for selling a house with tenants fast.
How to Sell a House Fast with Tenants
Give Notice (If There’s Time)
If you’re dealing with tenants on a month-to-month lease situation, this could be the easiest situation to handle. Presumably, you’ve built an understanding of notice into the contract or agreement, often requiring 30 or 60 days notice that they need to vacate the property. There are state laws regarding how much time you need to give so make sure you consult the local policies. You don’t have to provide any kind of specific reason for the notice since this is what’s called a “no cause” termination. Just make sure the letter includes specific dates (according to local laws) and inform the tenant to remove all their possessions and hand over all keys when they move out. If they do not move out by the agreed-upon date, you should begin eviction proceedings quickly as not to delay the process any further.
Check the Lease Terms
If your tenant is on a fixed lease, it could be a bit harder to get them to vacate the property. The first thing you need to do is consult the lease agreement itself. Confirm all of the details specific to when it ends and what kind of notice is allowed. Since we’re trying to sell quickly, waiting for a long-term lease to expire is a last resort.
In the meantime, check to see if the tenant has violated any of the lease terms. If you, you might be able to terminate the lease with notice. Don’t make up fake violations, however, just to get tenant’s out. That can come back to bite you legally. Legitimate violations can include a failure to pay rent, engaging in illegal activities, breaking a no-pet or no-smoking clause, subletting without permission, causing property damage, or including false information in the initial contract. If this is the case and you feel like you can back it up legally, submit a notice of violation and let the tenant know when they need to move out by.
Pay Tenants to Leave
If you find yourself without much recourse and you’re stuck with tenants in the middle of a long-term lease, you can simply offer to buy them out of the lease. Often referred to as a “cash for keys” tactic, it requires you to negotiate a fair settlement offer that will encourage them to move out when you want them to.
There are a few ways you can go about it. You can offer to pay them the difference between what they’ve been paying and what they’ll have to pay to move into a new place on short notice. You can offer to pay for their moving costs. You can offer to pay the security deposit or first month’s rent in their new apartment. Or you could literally just make up a number that you think is fair and you are able to pay and offer it.
Remember, the tenant is not obligated to agree to your terms. They’ve got a signed contract and can say no to whatever you might offer. So make sure you keep that in mind if you’re considering taking a strong stance.
Sell To Your Tenant
Depending on the type of property you’re trying to sell, you might be able to sell it directly to the tenant. Let them know what you’re planning to do and give them a chance to decide if they’d like to own it instead. You’ll have to wait and see if they can get financing before moving forward. If it is an option, you can also offer to enter a seller financing agreement, which allows the tenant to turn their rent into down payments on the property. Of course, this option only works if you are the sole owner or every owner is in agreement. You’ll also need to get approval from your lender if you want to do a seller-financing sale.
Execute the Early Termination Clause
If your lease contract includes an early termination clause, you can always go ahead and execute it if you feel like you’re out of options. Depending on the contract, these often include deadlines that range from 30 to 90 days following the sale closing. As for what you are allowed to say triggers an early termination, that is debatable. It might be spelled out in the lease. If not, it is often based around what is considered “reasonable” and a sale certainly fits that criteria.
There is a case where tenants, even those in good standing, don’t get to live out the entire lease. Some leases have an early termination clause to handle a variety of situations.
These clauses usually say that the lease terminates in 30/60/90 days, for example, after closing on the sale of the property. The “trigger” can be anything you want, as long as it is reasonable, and both parties agree to it in the lease.
Sell the Property As-Is
If you find yourself unable to get rid of unwanted tenants or simply don’t want to deal with all of the hassles that come with the process, you can always sell your property as-is to an investor like Cream City Home Buyers. Even if you have problem tenants who refuse to leave, real estate investors will often happily take the property off your hands and deal with it themselves, relieving you of the headaches that come with that process. They’ll also make you a fair cash offer and can close on the property with you in a matter of days. They can also work with you for an amicable solution for your tenants, even working directly with them to resolve any outstanding issues.