While many real estate investors take on rental units, there often comes a time when they are ready to sell the house. Timing is crucial when putting a home on the market, and sometimes a few months can make or break your chances of getting your maximum profit. For this reasons, many property owners begin to panic when they want to sell their house but tenants are still living on the property. It can be difficult to know what your rights are so you can take appropriate action. Here’s a few tips and tricks to help you navigate the process.
Know the Law
Every state has different laws pertaining to renter’s rights and landlord rights. Be sure that you get proper legal advice and discuss your options with an experienced advisor prior to moving forward with selling a tenant occupied property. You don’t want to leave yourself vulnerable to a lawsuit, fines or even jail time.
Ask Politely and Give Notice Before Showing the House
If the tenant’s lease period is almost over and they have informed you of their desire to move out, asking to show the house is probably expected and welcome. Simply discuss the issue with your tenant and be sure to give them at least 24 hours’ notice before bringing a prospective buyer to the house. After all, you don’t want them to rush around tidying the rooms when you’re trying to show the home.
Follow the Lease Agreement
Many property owners choose to include the ability to show the house to prospective buyers in the lease agreement. If your lease doesn’t reserve this right, you may have to discuss the issue with your tenant separately, and if they say no you may have to wait until the lease term is finished before selling the home.
Market the House to Investors
One way around this issue is to sell the house to other real estate investors. While you may be narrowing the list of available buyers, having quality tenants already occupying the property may be an excellent incentive for someone to pay top dollar for the house.
Give a Cash Incentive for Early Move Out
If you and your tenant are on a month to month lease, or you are asking them to leave before the original term date, be mindful of their finances. Moving unexpectedly can be very stressful, particularly for cash strapped families. Offering them money to help pay for a security deposit, moving expenses and first month’s rent for their next home may help them transition easier. While this may cost you a few thousand dollars, if the amount of profit from selling the home is substantial, it may be well worth the investment. Doing so will leave the rental unit free of tenants fast so you can style the home and show the house on your own terms.
Consider Seller Financing to Current Tenants
You may also think about selling the home to your current tenants. After all, they already live there and may be thrilled about the idea of owning it for themselves. Discuss the possibilities with your tenant and see if they are willing to apply for a mortgage. If they are denied a mortgage and you still wish to sell the property, you may be able to work out a seller financing deal. If you choose seller financing, be sure that you speak with a professional legal advisor to ensure your contract is appropriate for your new agreement.
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