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Selling a tenant-occupied rental property.

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Have any of you either sold a home with a tenant in it, or lived in a rental while it was up for sale? Any tips?

 

Our situation: building financial difficulties dictate that we need to sell our rental, which was the last house we lived in. We have plenty of equity in the house, which we really need to access ASAP. The house is being handled by a property management company. I believe the tenants' lease is up in August. We'd like to start showing soon, but agree not to close on a sale until the end of their lease. Hopefully this will give them plenty of time, and they'll be willing to cooperate. 

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You should put it on the market as soon as you can. The contract will stipulate that the tenant has occupancy until the end of the lease. It happens all the time. It will turn away some buyers, sure. But the same buyers would not have stayed in the market until August anyway (30-60 days max). Selling, like finding a job, is all about timing - hitting the market at the same time as the opportunity (buyer). You may not sell, but you will lose nothing. On the other hand, there is every possibility that you will sell to an investor or the people are looking only for the right house and not the right time (i.e. they can wait for occupancy).

 

The market, at least in Colorado, is super hot right now. It will only wain as the summer goes on and more homes are on the market and builders complete more homes.

 

Good luck!

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I was once an 'accidental' landlord. Then I found out that banks love investment properties. Consider a HELOC loan on your home or a second mortgage on the investment home (I don't think they do HELOC on investment homes). The fact that you have a tenant and cashflow is more valuable than your equity right now (assuming you don't have a monthly loss).

 

I've had so many friends move and have me manage their properties until they sell them. Then they found out they don't need to sell them and I ended up with a property management business. 

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What is the occupancy rate of the area? There should be some free information about that on Zillow and Neighborhoodscout.com. If the occupancy rate is low and there are many options for renters out there, try to keep them in through the transition. That will bring in a buyer easier and as pkstpaul said will show cashflow. If the area has high occupancy and there is little out there making a demand for rentals, a buyer may want to have it vacant, fix it up and rent for more. 

 

I have only handled rentals from a bank owned (acquired) property management perspective. Not as a personal owner/investor. 

Edited by EarlJibbs

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As long as you give the tenants plenty of forewarning and potential buyers are aware you're using it as a rental, you shouldn't have much of a problem. Did the same thing some years ago. Be out in the open of the situation, and people will either accept the situation or not. It's really not too big of a deal, we found.

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Have any of you either sold a home with a tenant in it, or lived in a rental while it was up for sale? Any tips?

 

Our situation: building financial difficulties dictate that we need to sell our rental, which was the last house we lived in. We have plenty of equity in the house, which we really need to access ASAP. The house is being handled by a property management company. I believe the tenants' lease is up in August. We'd like to start showing soon, but agree not to close on a sale until the end of their lease. Hopefully this will give them plenty of time, and they'll be willing to cooperate. 

make sure to check your contracts (every contract i've been in has given rights to the landlord to little to no notice inspections/viewings... but getting a heads up and time to prepare is nice) and communicate with the tenant, but it shouldn't be too much of a problem as long as the contract isn't violated, and the entity you sell to agrees to uphold the contract.

 

Edited by Blackmarch

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