Renting out one’s property is a great real estate venture when looking for a continuous source of passive income. However, at some point, a homeowner may decide it’s time to fully sell that property. This could be for any number of reasons; perhaps you are moving far enough away that it’s become a burden to maintain the property. Perhaps you are comfortable financially and don’t want to deal with the hassle of tenants. Whatever the reason, selling one’s rental house is common and easily achieved when done correctly.
But one question can’t be ignored: how do you do this when your property is currently being leased?
Many homeowners face the reality of needing to sell their property while it is occupied. This can be tricky territory to maneuver, but worry not! When conducted in a reasonable and professional manner, you should find the process can be quite stress-free. Here are our tips for selling your rental property during an active lease.
Options for selling your rental property during an active lease
There are a number of routes you can take when choosing to sell your home under an active lease. Here they are:
1. Wait until the lease expires
This is the most obvious option, but also potentially the longest and most inconvenient for you. While you are avoiding problems with tenants by waiting out their lease, this can be lengthy and time-consuming.
2. Search for an owner who will also rent out the property
Selling your property to a new homeowner who will also rent it out can be beneficial both to you and the current tenant. The tenant’s lease will then transfer over to the new landlord, who must abide by the old contract’s same rules and agreements. If you’re not under a tight time crunch, this is a great option for all parties involved.
3. “Cash-for-keys” agreement
This is a commonly practiced method whereby you will essentially pay your tenant to move out sooner. This can be done in a number of ways. Negotiate with your tenant; perhaps you can pay their security deposit, or provide moving services. Whatever the case may be, the objective is basically to incentivize them to leave. When done civilly, this can be a clean and easy way to end their lease early.
4. Sell to the tenant
If the tenant has lived there long enough, or the location is too convenient to let go of, they might just be interested in taking the property off your hands. When you first begin the process of trying to sell your home, be sure to keep the tenant adequately updated. They may end up becoming the buyer if you provide them with a timely notice.
5. End the lease if the tenant has violated the agreement
Unlike the cash-for-keys agreement, this particular method can be a bit messier. If your tenant has clearly violated the lease, you are fully within your rights to terminate the contract and move forward with selling your home. Remember that there are legal statutes which oversee these exact situations. Inform yourself on the procedures of evicting and what notices need to be made before you take this matter on.
As you just read, there are a number of methods you can adopt in order to sell your home during an active lease. In addition, here are a few crucial behaviors you should practice to ensure that the whole process is clean, clear, and mess-free.
- Be communicative. To prevent any unnecessary arguments and misunderstandings, the landlord should be as open and communicative about the process as they can be to the tenant. You don’t need to update them on every single step and every prospective buyer. However, you should give fair notices and answer any questions. This will quell their own fears and confusion about the situation, leaving you both happy, informed, and prepared.
- Be firm. Additionally, it’s important to remember why you are selling your rented property. Regardless of how the tenant feels, you are still on a schedule. While negotiations with your tenant can be done during an active lease, remember to keep the goal in mind: to sell the home.
- Get everything in writing. Throughout the entire process, be sure to get all agreements officially signed by both parties in clear-cut, legal writing.
- Remember tenants have rights. Our legal system has ensured that both landlords and tenants have certain property, privacy, and other rights. Before you embark on any ventures during the selling process – especially when it comes to entering the property – be sure to understand what your legal boundaries are by staying informed on tenant rights.
- Rule of thumb: When showing the house to prospective buyers, give tenants a fair warning. You are legally obligated to notify them 24 hours before entering the home. Generally, it is better to set up specific, agreed-on dates and times with your tenant for house-showing.
Avoid the hassle of looking for a buyer
Want to know the quickest, cleanest way to transfer ownership of your property? Work with a house-buying company! These local businesses will buy homes off you for a reasonable price – no realtor needed. When working with a house-buying company, you can forego the stress of repairs, updates, and paperwork, all while knowing you are receiving a fair price for your home.
For more information, be sure to scour our website and contact us for any questions or proposals!