Selling a Home With Tenants – 4 Things You Need to Know | alecsalameh.com
Getting involved in a Florida investment property can be a highly profitable venture, but there are some things to know throughout the process. Luckily, Alec Salameh is highly versed in Lee County real estate and can provide you with everything you need to be prepared. In this article, we will cover four things to know about selling a home with tenants.
As with any home sale, you should be familiar with your rights and responsibilities as the seller of your Florida investment property. This is especially true if you are trying to sell a rental property that is currently occupied by tenants. Selling a home with tenants can be a complicated and stressful process, but by knowing the facts, you can avoid a lot of unnecessary headaches and be stress-free in no time!
You Need to Work With a Real Estate Professional
Selling any property can be a complicated process with laws and regulations that need to be considered for both the buyer and the seller. Not to mention, determining financial factors, inspections and appraisals, closing costs, and several other factors that may come into play throughout the process. When you add a tenant into the mix, it just gets that much more complicated. No matter how long you have been a landlord, or how many homes you have sold in your life, it is a good idea to at least consult with a professional before selling a home with tenants.
A Lee County real estate professional will be able to tell you all the current laws and regulations as well as landlord and tenant rights. As a real estate agent, a professional will need to be up to date on all these inner workings of the industry in order to remain compliant and continue to hold a license. This way, you can ensure that you are compliant with all laws and no one is put at risk throughout the process.
You Need To Review Your Lease and Consider All Options
When you are considering selling a home with tenants, one of the most important things to know is your lease. There are several options that may be available depending on the terms and conditions of the lease. Once you review your lease, you will need to consider what options are available to you and which one is the best based on your relationship with the tenants and intentions for the sale.
If you have a month-to-month lease, you are in luck. You can simply choose to terminate the lease by providing your tenant with the proper notification and wait for the termination of the lease before listing the property. It’s all smooth sailing from there.
If you do not have a month-to-month lease, it may be a bit more complicated. This is where the real considerations come into play. There are a few different ways that you can approach the sale to maintain compliance with laws and prevent unnecessary conflict. You can wait out the lease, execute an early termination clause, sell to an investor, buy out the tenant, or sell to the tenant.
Waiting out the term of the lease allows you to bypass all the extra-legal and regulatory processes when dealing with an active tenant. There are a few benefits to waiting out the lease. Your home value may suffer from having fixed rent with active occupants. If you wait out the lease, you can raise the rate of rent which raises the value of the property. In addition, you can perform professional cleaning and renovations on the property if it is vacant rather than occupied.
You may be able to take advantage of an early termination clause. There are several reasons to terminate a lease early. This might be due to lease violations with difficult tenants or simply a clause that allows the lease to end upon the completion of a sale.
If you want to sell the property quickly without waiting out the lease and you have no cause for early termination, you can attempt to sell to an investor. In this case, the lease would be taken over by the new owner rather than being terminated during the sale. This limits your prospects when looking for buyers, however, if marketed correctly as a commercial property, it may be an attractive option for investors since it comes with guaranteed income right off the bat.
Depending on your situation, it may be more beneficial to offer your tenant “cash for keys” or buy them out of their lease. While this can sound counterintuitive, it may end up more profitable. This can be an attractive option if the tenants are particularly difficult, the rate of rent is diminishing property value significantly, or if renovations would significantly increase property value. A real estate agent can help you determine an appropriate amount to offer the tenants.
If you are looking to make a quick sale, selling the property directly to the tenant could be another option to bypass legal compliance issues and complete the sale as quickly as possible. If your tenant is in particularly good standing, you can also offer a seller financing agreement similar to a “rent to own.”
You Have to Consider the Tenant When Showing the Property
When selling a home with tenants, scheduling a showing isn’t as simple as making an appointment or giving someone a lockbox code. It is important to consider the tenant’s schedule and compliance with showings to ensure a smooth experience for potential buyers.
Communicate With the Tenants
At the end of the day, it is important to be upfront about the sale and communicate with the tenants when trying to sell a house with tenants. This will ensure that everything goes as smoothly as possible.
With so many things to consider, we highly recommend contacting a professional to discuss all your options and decide on a suitable solution that works for you. Contact Lee county real estate expert Alec Salameh today to discuss how to sell a home with tenants.