Selling a House With a Tenant Living There: What Are Your Options?
Are you selling your rental property with a tenant still living in it? If so, you already know that dealing with tenants is a complicated affair. Selling your rental property with tenants adds more complexity to an already elaborate process. The United States has seen surging rental real estate trends surrounding this issue. Most notably, the ongoing shift to remote working has caused rent growth to shrink in metropolitan areas and skyrocket in suburban markets. In recent years, rents have been growing at a brisk pace due to low rental vacancy rates and an increased demand driven by expensive new home builds.
So, how can you
sell your house fast Kansas City? Here are a few options to try out.
Wait For The Lease Expiry
The easiest way to sell my inherited house fast in Kansas City is to allow the lease to expire before the tenant vacates the house. Generally, there are two categories of lease agreements: monthly and fixed term.
For a monthly lease, you only need to give the tenant a timely notice, usually 30 days, before terminating the lease. However, some states, like Delaware, allow up to 60 days' notice for a tenant to vacate a house.
The primary benefit of waiting until the lease expires is that it allows you to repair or upgrade the property without disturbing the tenant. Additionally, you’ll have adequate time to showcase the house to
Kansas City home buyers once the tenant moves out.
Ask Your Tenant To Buy The Property
Sometimes, when I need to sell my house fast Kansas City, the tenant may be the buyer I’m looking for, especially after having occupied the house for some time. It’s okay to ask the tenant if they’re interested in buying the home if they love it and have ready cash. A fair offer from the tenant to buy the house will save you more time and energy than you would have spent looking for a buyer.
In such instances, a real estate attorney will help you draft an agreement based on the following options:
Seller-finance Agreement
In a seller-finance agreement, you’ll act as a lender and continue collecting rental payments from the tenant over an agreed period. Eventually, the tenant will make a balloon payment to complete the property purchase.
A seller-finance agreement allows you to hold an assumed mortgage for the property, in which you can roll a foreclose process if the tenant stops paying the house. However, you should legally own the home and not have an outstanding mortgage on the property to enter a seller-financed agreement.
Lease-To-Own Agreement
A lease-to-own agreement allows the tenant to occupy the house while planning to buy the property in the long run. Under this agreement, you may have a set home price for the tenant to clear within a specified time, usually a year. Alternatively, you may have a structured arrangement in which the tenant continues paying the rent without any down payment on the home price.
Sell The House With an Active Lease
A common question most landlords ask is ‘How can I sell my house fast in Kansas City with a tenant occupying the property?’ The truth is you can sell my house fast Kansas City Missouri while you have an existing tenant, provided you don’t breach the rental agreement.
As you list the house in the property market, you should remember that the tenant reserves the right to continue occupying the house until the lease expires.
The best option for selling a property with an active lease is finding an investor to continue renting the property to the same tenant. If the tenant doesn’t have any rent arrears, it is much easier, as they can continue paying the rent while looking forward to renewing the lease upon expiry.
Selling to a property investor is also advantageous to the investor since they will be buying an occupied home which will generate income from the first day of purchase.
Negotiate For An Early Exit Of The Tenant
Unlike monthly leases that only require a vacation notice, fixed-term leases are a bit complicated. For instance, if you’re selling an occupied property, you can’t terminate the lease unless the tenant violates the rental agreement.
Some valid reasons to terminate the lease may include the following;
- Serious property damage.
- Breach of rent payment.
- Subleasing without permission.
- Violation of clauses on pets, illegal activities, and many more.
How To Negotiate With The Tenant For An Early Exit
Suppose you’re wondering, ‘Can I negotiate for an early exit and sell my house fast Kansas City?’ Well, the most important aspect is to seek the tenant’s consent to vacate before the lease expires.
The following deal breakers will come in handy.
Offer An Incentive
You can sweeten an early exit deal through customized incentives to your tenant. For instance, during the sales negotiation, you may allow the tenant to pay half the usual rent or pay them some cash in return for an early exit. The amount of incentive depends on the financial return you expect from your new investment.
Pay The Moving Costs
Giving your tenant an abrupt notice of vacation may sometimes subject them to a hefty financial burden. As a result, you may pay a suitable company to facilitate their easy movement to an alternative residence.
Pay a Deposit On The New Property
Another option to entice a tenant to embrace an early exit is paying a deposit on their new residence. Here, you may pay a month’s rent and a security deposit on the new property as a sign that you care about the tenant’s welfare.
Critical Takeaways For Selling a Tenant-occupied Property
Selling an occupied property requires a delicate balance between the tenant’s comfort and your satisfaction as the property owner. Although some tenants will easily understand your decision, others may feel disgruntled and even refuse to end the lease prematurely.
Below are the key takeaways for a smooth sale of an occupied house:
Help The Tenant
You can direct the tenant to an alternative residence if you own other apartments or suggest better alternatives in the local property listings.
Schedule a Convenient Viewing Time
It is advisable to schedule a convenient time for prospective buyers to view the property. Ask the tenant about their preferred time for opening the property for viewing.
Hire a Cleaning Company
Hire a cleaning company to help maintain the lawns and keep the house clean. That way, you’ll reduce the burden on the tenant during the sales process.
Work With The Professionals
Selling an occupied rental property may be tedious, especially if you have an existing lease agreement. As a result, you need experts such as real estate attorneys and realtors to help you negotiate the deal.
About the author
Benjamin Allgeyer
Benjamin Allgeyer is a real estate investor and the owner of Crown City Home Buyers, a cash home buying company based in Kansas City, MO. Benjamin has a passion for helping homeowners who are facing difficult situations, such as foreclosure or financial distress, by providing them with a quick and hassle-free solution to sell their homes. He is committed to providing his clients with exceptional service and helping them achieve their real estate goals.
We here at Crown City Home Buyers are dedicated to getting the most cash possible into your pockets for your home as-is, so that you can get the most out of this situation and prepare to move on. We will buy houses in any condition without you needing to fix your home before sale.