Selling a property for a profit can sometimes be a tall order that involves costly renovations, marketing, and real estate savvy. But if you are trying to list a home with tenants still living inside, it can be even more challenging.
While selling a tenant-occupied property is completely legal, the new buyer must honor any existing rental agreement that had been signed by the previous owner. If your tenants have six more months on the contract when the property is transferred, that means the tenants should be allowed to stay for the remainder of time stipulated in the lease.
Communicate With Your Tenants
Be upfront with your tenants about your intention to put the property on the market and what that will entail. Explain the legal obligations of the new owner to honor the existing rental agreement and let them know about the possibility that the new owner may not want to re-up the lease or charge more once the rental agreement ends.
The sooner you disclose the information and the more open you are about the process, the more time your tenants will have to make necessary arrangements and the more likely it is they will be accommodating about showings.
Give Your Tenants Advance Notice
If no written lease exists (for example, when tenants pay the rent month by month), most states require a landlord to give tenants at least one month’s notice of the sale so they have time to relocate if needed. When it comes to longer-term rentals, landlords will typically be required to notify tenants that they do not intend to renew their lease no less than 60 days prior to the lease end date.
If you have been transparent with your tenants and cultivated a good relationship, viewings will likely be much easier to set up. Be considerate about the tenants’ schedule and tactful in your approach as they may have the right to refuse viewings. In addition, landlords must inform tenants of a visitor with at least 24 hours in advance.
Get an Inspection Done
It is a good idea to get a fresh inspection done before you start scheduling showings. As tenants rotate in and out, the property might not be in the same condition as before. An inspector can identify problems that need to be addressed prior to listing, so you can save time during the contingency period.
Are you interested in learning more about real estate investing? RLG would love to help you find a suitable investment strategy for your goals! Call us today to learn more!