OT...real estate question

[LaJolla Lion]

Has anyone here sold a rental property with tenants still occupying the home? How easy or difficult is it to do? The home is in a high demand neighborhood, but I'd rather not have the second home now that I am 400 miles from it. I don't want to bust up the lease as they are a great young family, but I will have to sell it lower than market value in the area as the kitchen and bathroom need upgrades. I can't get in there to do it, nor do I want to disrupt my tenants. Is there a big enough market out there for people who will scoop up a home like that?

 

[Art]

Hard to say. Most buyers aren't looking for rental properties. How long is the remainder of the lease?

 

[Nitt1300]

Has anyone here sold a rental property with tenants still occupying the home? How easy or difficult is it to do? The home is in a high demand neighborhood, but I'd rather not have the second home now that I am 400 miles from it. I don't want to bust up the lease as they are a great young family, but I will have to sell it lower than market value in the area as the kitchen and bathroom need upgrades. I can't get in there to do it, nor do I want to disrupt my tenants. Is there a big enough market out there for people who will scoop up a home like that.

I do a little part time property management for a good friend when he is out of the area. The last four properties he bought were all tenant occupied. It's not an issue as long as they aren't in arrears and the police aren't keeping them under surveillance. The fact that it could use some updates allows the next owner to add value it's occupied means he doesn't have to do it immediately. Some buyers would see that as an ideal situation-assuming they are in the rental business.

 

[PSUSignore]

I've been a buyer during this scenario and it can be irritating shopping for properties when they are occupied. There are pros and cons from the buyer side. That said, the vast majority of rental properties I shopped for were occupied so it's quite common in my area.

Some of the thoughts that came to my mind as a buyer:
As a buyer I don't necessarily want to inherit your tenants. I don't know how good of a job you did in vetting them, so buying with existing tenants means added risk for me. Maybe I want the home for myself or a family member, and I can't do that until the existing lease expires. The upside is there is a lease in place so if it's a good tenant I'm getting rental income on day 1. But another downside is I may not agree with the rent you've been charging them, and if I increase it the tenants will be upset with me, not you.

Dealing with the occupants when going to look at the property before buying can be a pain. Of course they have rights to be in the home and some wouldn't leave when I was shopping, making it very awkward. In a few cases I arrived to the complete surprise of the tenant because the selling realtor didn't communicate with the tenant properly. In one case I actually woke up someone sleeping in the house when I was already inside (they worked nights and slept during the day). Needless to say they were very unhappy with their landlord for that, but yelled at my realtor for it. Also they will have their personal things all over the home, making it harder to perform a proper inspection and evaluation of the structure itself which is what I'm there for.

 

[LaJolla Lion]

Hard to say. Most buyers aren't looking for rental properties. How long is the remainder of the lease?

They have been there for 2 years so it is month to month right now.

 

[PSUSignore]

They have been there for 2 years so it is month to month right now.

That puts them at high risk of getting displaced if someone new takes on the property too. Without a lease they don't have much protection as renters and there's no guarantee the new owner would let them stay.

 

[LaJolla Lion]

That puts them at high risk of getting displaced if someone new takes on the property too. Without a lease they don't have much protection as renters and there's no guarantee the new owner would let them stay.

Yep. Certainly an issue. I haven't put it on the market yet, but I am kicking the tires a bit on it.

 

[jim cummings]

I'm currently a tenant in a house that sold in January. The house was on the market for 2.5 weeks before an offer was made. It closes Mar 31. Legally I had to be given 60 days notice to vacate the property. If you've read my stories about my neighbor, you'll know that having to move is bitter sweet.

My girlfriend and I were offered to purchase the house we currently live in, but I can't take the neighbor anymore so I declined. We ended up purchasing and close on the 28th.

That said, from a tenant POV... it sucks ass. The selling process has been a pain in my ass.

I'll put it this way... for the last 2 months there's been nothing but major headaches. Contractors in and out doing repairs, random people walking around checking out the property, showings, inspections, appraisals, the solicitations for moving services... when these people come, I the tenant, was expected to leave and then come back when people were finished.

There was a week straight of evening showings followed by a two day open house. When I asked the landlord to reduce rent to compensate for the inconvenience, she politely declined. So as a result I started to decline showings, and then the landlords dad shows up threatening me with how if I need a reference down the road for renting purposes that I may be deemed as an uncooperative tenant, or that there are ways to find use of my security deposits. Ok, I get it. You want to puff out your chest and say this and that but the truth is after seeing that, I didn't really GAF anymore and I asked him to leave. So he left and then one of the people who toured the house about 3 days earlier made an offer a few hours later which was accepted.

So the showings stopped, but then the inspection came, the appraisal, the boat load of contractors showing up... just this past weekend the listing agent said that the buyer wanted access to the property to take measurements of the bathroom? Ok, WTF... hello! People are trying to live here.. So, me being the nice guy that I am, allowed it to happen. I would want the same kind of treatment. Except that I have more common decency than to start bothering people for chicken shit stuff.

The burden of the upkeep and keeping the house in show condition falls squarely on my shoulders. I have to have anxiety attacks of people lookin at my shit. I have to go out and eat 5 straight nights because of showings. My dogs wigged out with random people popping in and out. I was a team player and when I gave an inch, people would take 3 feet. When I questioned the fairness of this process, I was basically told to sit back and do as I was told and be thankful that my rent wasn't raised last year, because "we could have gotten a lot more". Fair enough, but i didn't ask for that.

The only things that were expected of me was to treat the house if it were my own and pay the rent on time. All of which was done. I made minor improvements, I used my own money to enhance the property's curb appeal, I dealt with the annoying neighbor and his masturbating kid. And I never batted an eye, complained, or asked for anything in return.

So, LaJolla... you're well within your right to sell your home. The fact that you came here out of concern for inconveniencing your tenants is commendable. Same can't be said for my situation. So take it from me... money talks. If your tenants are displaced from normal living due to trying to sell your house, offer to buy their meal. It'll go a long way.

I don't have the time to have to sit through court trying to recover my security deposits so I'm biting my tongue until after its all said and done. I'll wash my hands of it as I move into MY larger home, larger yard, no masturbating junkie freak neighbor 6 feet away, and I'll have a nice pool to jump into at the days end.

 

[LaJolla Lion]

I'm currently a tenant in a house that sold in January. The house was on the market for 2.5 weeks before an offer was made. It closes Mar 31. Legally I had to be given 60 days notice to vacate the property. If you've read my stories about my neighbor, you'll know that having to move is bitter sweet.

My girlfriend and I were offered to purchase the house we currently live in, but I can't take the neighbor anymore so I declined. We ended up purchasing and close on the 28th.

That said, from a tenant POV... it sucks ass. The selling process has been a pain in my ass.

I'll put it this way... for the last 2 months there's been nothing but major headaches. Contractors in and out doing repairs, random people walking around checking out the property, showings, inspections, appraisals, the solicitations for moving services... when these people come, I the tenant, was expected to leave and then come back when people were finished.

There was a week straight of evening showings followed by a two day open house. When I asked the landlord to reduce rent to compensate for the inconvenience, she politely declined. So as a result I started to decline showings, and then the landlords dad shows up threatening me with how if I need a reference down the road for renting purposes that I may be deemed as an uncooperative tenant, or that there are ways to find use of my security deposits. Ok, I get it. You want to puff out your chest and say this and that but the truth is after seeing that, I didn't really GAF anymore and I asked him to leave. So he left and then one of the people who toured the house about 3 days earlier made an offer a few hours later which was accepted.

So the showings stopped, but then the inspection came, the appraisal, the boat load of contractors showing up... just this past weekend the listing agent said that the buyer wanted access to the property to take measurements of the bathroom? Ok, WTF... hello! People are trying to live here.. So, me being the nice guy that I am, allowed it to happen. I would want the same kind of treatment. Except that I have more common decency than to start bothering people for chicken shit stuff.

The burden of the upkeep and keeping the house in show condition falls squarely on my shoulders. I have to have anxiety attacks of people lookin at my shit. I have to go out and eat 5 straight nights because of showings. My dogs wigged out with random people popping in and out. I was a team player and when I gave an inch, people would take 3 feet. When I questioned the fairness of this process, I was basically told to sit back and do as I was told and be thankful that my rent wasn't raised last year, because "we could have gotten a lot more". Fair enough, but i didn't ask for that.

The only things that were expected of me was to treat the house if it were my own and pay the rent on time. All of which was done. I made minor improvements, I used my own money to enhance the property's curb appeal, I dealt with the annoying neighbor and his masturbating kid. And I never batted an eye, complained, or asked for anything in return.

So, LaJolla... you're well within your right to sell your home. The fact that you came here out of concern for inconveniencing your tenants is commendable. Same can't be said for my situation. So take it from me... money talks. If your tenants are displaced from normal living due to trying to sell your house, offer to buy their meal. It'll go a long way.

I don't have the time to have to sit through court trying to recover my security deposits so I'm biting my tongue until after its all said and done. I'll wash my hands of it as I move into MY larger home, larger yard, no masturbating junkie freak neighbor 6 feet away, and I'll have a nice pool to jump into at the days end.

We SCREEN the hell out of our tenants. Background checks, credit checks, and check with their employment. This is a young couple in their mid to late 20's with 2 kids and have never missed a payment. They have made repairs on their own and I just tell them to send the receipts and deduct the labor costs (male is a contractor). I have told them I am looking to sell, but I would give them adequate time to look if that is the case. One of my close friends is also very interested in this place as an investment property and wouldn't be looking to boot anyone anytime soon so that would be the ideal solution. I'll cut him a break on the cost and he can issue them a year lease upon the sale going through. If that falls through, I may have to go the regular route which is not fun for anyone involved.

 

[PSUFBFAN]

I'm currently a tenant in a house that sold in January. The house was on the market for 2.5 weeks before an offer was made. It closes Mar 31. Legally I had to be given 60 days notice to vacate the property. If you've read my stories about my neighbor, you'll know that having to move is bitter sweet.

My girlfriend and I were offered to purchase the house we currently live in, but I can't take the neighbor anymore so I declined. We ended up purchasing and close on the 28th.

That said, from a tenant POV... it sucks ass. The selling process has been a pain in my ass.

I'll put it this way... for the last 2 months there's been nothing but major headaches. Contractors in and out doing repairs, random people walking around checking out the property, showings, inspections, appraisals, the solicitations for moving services... when these people come, I the tenant, was expected to leave and then come back when people were finished.

There was a week straight of evening showings followed by a two day open house. When I asked the landlord to reduce rent to compensate for the inconvenience, she politely declined. So as a result I started to decline showings, and then the landlords dad shows up threatening me with how if I need a reference down the road for renting purposes that I may be deemed as an uncooperative tenant, or that there are ways to find use of my security deposits. Ok, I get it. You want to puff out your chest and say this and that but the truth is after seeing that, I didn't really GAF anymore and I asked him to leave. So he left and then one of the people who toured the house about 3 days earlier made an offer a few hours later which was accepted.

So the showings stopped, but then the inspection came, the appraisal, the boat load of contractors showing up... just this past weekend the listing agent said that the buyer wanted access to the property to take measurements of the bathroom? Ok, WTF... hello! People are trying to live here.. So, me being the nice guy that I am, allowed it to happen. I would want the same kind of treatment. Except that I have more common decency than to start bothering people for chicken shit stuff.

The burden of the upkeep and keeping the house in show condition falls squarely on my shoulders. I have to have anxiety attacks of people lookin at my shit. I have to go out and eat 5 straight nights because of showings. My dogs wigged out with random people popping in and out. I was a team player and when I gave an inch, people would take 3 feet. When I questioned the fairness of this process, I was basically told to sit back and do as I was told and be thankful that my rent wasn't raised last year, because "we could have gotten a lot more". Fair enough, but i didn't ask for that.

The only things that were expected of me was to treat the house if it were my own and pay the rent on time. All of which was done. I made minor improvements, I used my own money to enhance the property's curb appeal, I dealt with the annoying neighbor and his masturbating kid. And I never batted an eye, complained, or asked for anything in return.

So, LaJolla... you're well within your right to sell your home. The fact that you came here out of concern for inconveniencing your tenants is commendable. Same can't be said for my situation. So take it from me... money talks. If your tenants are displaced from normal living due to trying to sell your house, offer to buy their meal. It'll go a long way.

I don't have the time to have to sit through court trying to recover my security deposits so I'm biting my tongue until after its all said and done. I'll wash my hands of it as I move into MY larger home, larger yard, no masturbating junkie freak neighbor 6 feet away, and I'll have a nice pool to jump into at the days end.

Great post. I have owned and rented a single family dwelling for 30 years. I never went through the process of acquiring new tenants until the old ones were out. Mainly because I knew how much of an inconvenience it would be to the existing tenants - much of which is described in JC's post. Furthermore, I wanted a few weeks to get it back into "showing condition" which sometimes meant nothing more than minor cosmetic cleanings and other times it was a total re-do from ceiling to floor. It was much easier to schedule contractors too, when I could simply say "the house is vacant - let me know what day/time you want to be there and I will make sure the front door is unlocked".

Can you get it sold while they are still in there ... yes as others have pointed out. But, out of courtesy to your tenants (who seem to be good people with a nice family), I think you should give them 30-60 days to find someplace new, let them get out, do your re-hab, and then place it on the market.

The exception might be if your friend is willing to buy it from you before you place it on the market and he would be agreeable to your current tenants continuing in place (and vice versa with them).

 

[ThePennsyOracle]

LaJolla, why not tell the couple you're going to list it in/around March 2018 with the caveat that it'll be sooner if they find somewhere else? That way, it gives them plenty of notice and gives you the chance to sell it sooner (or decide to not sell it at all).

 

[LaJolla Lion]

LaJolla, why not tell the couple you're going to list it in/around March 2018 with the caveat that it'll be sooner if they find somewhere else? That way, it gives them plenty of notice and gives you the chance to sell it sooner (or decide to not sell it at all).

I was thinking I would tell them it will go on the market in June or July, but I'm waiting to hear back from someone first. I would notify them in April and that gives them 2-3 months to look around and find something else.

 

[PSUSignore]

I'm currently a tenant in a house that sold in January. The house was on the market for 2.5 weeks before an offer was made. It closes Mar 31. Legally I had to be given 60 days notice to vacate the property. If you've read my stories about my neighbor, you'll know that having to move is bitter sweet.

My girlfriend and I were offered to purchase the house we currently live in, but I can't take the neighbor anymore so I declined. We ended up purchasing and close on the 28th.

That said, from a tenant POV... it sucks ass. The selling process has been a pain in my ass.

I'll put it this way... for the last 2 months there's been nothing but major headaches. Contractors in and out doing repairs, random people walking around checking out the property, showings, inspections, appraisals, the solicitations for moving services... when these people come, I the tenant, was expected to leave and then come back when people were finished.

There was a week straight of evening showings followed by a two day open house. When I asked the landlord to reduce rent to compensate for the inconvenience, she politely declined. So as a result I started to decline showings, and then the landlords dad shows up threatening me with how if I need a reference down the road for renting purposes that I may be deemed as an uncooperative tenant, or that there are ways to find use of my security deposits. Ok, I get it. You want to puff out your chest and say this and that but the truth is after seeing that, I didn't really GAF anymore and I asked him to leave. So he left and then one of the people who toured the house about 3 days earlier made an offer a few hours later which was accepted.

So the showings stopped, but then the inspection came, the appraisal, the boat load of contractors showing up... just this past weekend the listing agent said that the buyer wanted access to the property to take measurements of the bathroom? Ok, WTF... hello! People are trying to live here.. So, me being the nice guy that I am, allowed it to happen. I would want the same kind of treatment. Except that I have more common decency than to start bothering people for chicken shit stuff.

The burden of the upkeep and keeping the house in show condition falls squarely on my shoulders. I have to have anxiety attacks of people lookin at my shit. I have to go out and eat 5 straight nights because of showings. My dogs wigged out with random people popping in and out. I was a team player and when I gave an inch, people would take 3 feet. When I questioned the fairness of this process, I was basically told to sit back and do as I was told and be thankful that my rent wasn't raised last year, because "we could have gotten a lot more". Fair enough, but i didn't ask for that.

The only things that were expected of me was to treat the house if it were my own and pay the rent on time. All of which was done. I made minor improvements, I used my own money to enhance the property's curb appeal, I dealt with the annoying neighbor and his masturbating kid. And I never batted an eye, complained, or asked for anything in return.

So, LaJolla... you're well within your right to sell your home. The fact that you came here out of concern for inconveniencing your tenants is commendable. Same can't be said for my situation. So take it from me... money talks. If your tenants are displaced from normal living due to trying to sell your house, offer to buy their meal. It'll go a long way.

I don't have the time to have to sit through court trying to recover my security deposits so I'm biting my tongue until after its all said and done. I'll wash my hands of it as I move into MY larger home, larger yard, no masturbating junkie freak neighbor 6 feet away, and I'll have a nice pool to jump into at the days end.

It's really a no win situation for anyone. The seller has to rely on you to keep the property in good shape when buyers come to view it. The tenant has to deal with a bunch of nonsense that really isn't their concern since they just rent the place and don't own it. In my experience many tenants didn't leave when I was looking at properties and I can't say I blame them, who wants random strangers looking through a home full of their personal belongings? The buyers have to work with both sellers and tenants to visit the property, and the cooperation from the tenants can be hit or miss.

Waiting to sell until it's vacant might not be an option either, either because the seller can't wait or the tenant can't move out. My market is very hot from a rental standpoint in terms of price and availability. Tenants that are happy with their rent probably don't want to go anywhere because that likely means they'd have to pay more, if they can even find something that works for them. It really creates a rough situation for all involved.

The idea of giving a discount on rent to accommodate the tenant for the hassle is a good one. I think overcommunicating between the landlord and the tenant is probably the best thing you can do, to ensure they understand who's coming to the home and when anc can plan accordingly. Depending on your market, it might be an option to state that buyers can't view the inside without an accepted offer, out of respect for the tenant. Several duplexes I considered had this caveat, but usually only on 1 side of the duplex. If you aren't in a hot market that might not be an option though, because it will keep some buyers away.

 

[Peetz Pool Boy]

Has anyone here sold a rental property with tenants still occupying the home? How easy or difficult is it to do? The home is in a high demand neighborhood, but I'd rather not have the second home now that I am 400 miles from it. I don't want to bust up the lease as they are a great young family, but I will have to sell it lower than market value in the area as the kitchen and bathroom need upgrades. I can't get in there to do it, nor do I want to disrupt my tenants. Is there a big enough market out there for people who will scoop up a home like that?

Have you thought about a "lease to own" relationship with the current renters, especially since they seem to be steady payers? I understand your desire to get free from the property if you're 400 miles away.

 

[LaJolla Lion]

Have you thought about a "lease to own" relationship with the current renters, especially since they seem to be steady payers? I understand your desire to get free from the property if you're 400 miles away.

They didn't want to buy the home.

 

[Peetz Pool Boy]

They didn't want to buy the home.

If you've already raised the subject with them and theyre renting month-to-month, they probably won't be surprised with 30 day notice. 60 days would be very generous of you.

I think you'll get better results if the property is vacant when you sell it.

 

[LaJolla Lion]

If you've already raised the subject with them and their renting month-to-month, they probably won't be surprised with 30 day notice. 60 days would be very generous of you.

I think you'll get better results if the property is vacant when you sell it.

Agree. If I throw 10k into it, I can probably make a little more profit as well.

 

[Peetz Pool Boy]

Agree. If I throw 10k into it, I can probably make a little more profit as well.

Sounds like a good plan

 

[91Joe95]

If you don't need the equity right now, have you considered hiring a rental management property to run it for you? They usually charge ~10% of the rent plus repairs, but they take care of everything - leases, finding and vetting new tenants, tracking down rent payments, etc. You can keep making money and build equity until you have a more opportune time.

 

[Osprey Lion]

Has anyone here sold a rental property with tenants still occupying the home? How easy or difficult is it to do? The home is in a high demand neighborhood, but I'd rather not have the second home now that I am 400 miles from it. I don't want to bust up the lease as they are a great young family, but I will have to sell it lower than market value in the area as the kitchen and bathroom need upgrades. I can't get in there to do it, nor do I want to disrupt my tenants. Is there a big enough market out there for people who will scoop up a home like that?

Usually only investors are looking for tenant occupied properties and there are far less of them than home buyers. But it doesn't cost you anything to list it. So you can do so as an investment property and make a decision after/if you see any offers.