When you’re ready to sell your rental property, tenants can complicate the process. While there is nothing illegal about selling a tenant-occupied property, it may narrow the pool of potential buyers. On the contrary, it’s possible you could tap into a network of local investors looking to earn rental income who may view a lease as a great investment. If you’re aiming to maximize net proceeds and list the property on the market, it’s a great idea to ensure the property is clean and in good repair. It can be difficult making repairs with a tenant in place. Be sure to communicate with your tenants and don’t be shy to extend concessions on rent for the inconvenience. Regardless of how you plan to move forward, it’s never a bad idea to take a moment and consider all the options. Let's take a look at a few options when selling a tenant occupied property.

Wait for the Lease To End

If you're not in a rush and don't mind waiting for the lease to expire, do so. Allow the tenants to move out and prepare the home for sale without having to orchestrate the process with the tenant. It's a good idea to leave a cushion for yourself in the event unexpected surprises come up…like your tenant needs an extra month to secure a new space.

Terminate the Lease Early

If your tenant has violated any terms of the agreement, it’s possible to terminate the lease before it expires. Property damage and refusing to pay rent are the two main contenders that push landlords to eviction. If you’ve included an early termination clause in your lease, or if your tenants are month-to-month, all that will be required is a proper notice to the tenant in compliance with your state's laws. If your tenants are taking good care of the property and you're intent on honoring the remainder of the lease term, let’s explore a few other options.

Sell to an Investor

It may be possible to sell your property off-market to an investor who doesn’t mind the existing lease. If you have long-term, reliable tenants, your tenant-occupied property may even be an attractive selling point to investors. If your tenants are currently paying below-market rent, this may encourage investors to offer less than if tenants we're paying market rent. If you're trying to sell a property where the rent is significantly below market rate, it may be prudent to wait for the tenants to move before selling the property.

Cash for Keys

If you want your property empty before selling it, one approach is to provide the tenant with “cash for keys” as an incentive for vacating the premises early.  It’s less expensive and time-intensive than an eviction, and it’s often a great means of keeping everyone happy. If you decide to go this route, it's a good idea to have the tenant endorse the terms of your arrangements in writing. We find it helpful to clearly state that the property should be free of personal belongings and clean on the move-out date. We also designate a few different cash incentives, paying the highest amount for a prompt move-out date and a slightly smaller cash incentive for a more lenient amount of time to vacate. Plan to be present on the tenant’s move-out date to complete a walkthrough before you exchange the keys for the funds.

How much should you pay?

It's entirely up to you. We pay anywhere between $1,000 - $2,000 as an incentive for tenants to move out and not damage property. The more you’re able to offer, the more cooperative the tenant will likely be. We like to speak about the cash as a means of helping with moving expenses. This puts us in a favorable light with the tenant who may appreciate the gesture during a time when they’re facing a few extra expenses. If you’re strapped for cash and looking to get paid from the sale of your rental property as soon as possible, consider selling to CoreMark Homes. Every purchase at CoreMark is "as-is". You won't need to make repairs, hire a real estate agent or pay any closing costs. Read More: How to Decide if CoreMark Is Right for You

Tips to Keep in Mind

If your tenant is struggling to pay rent, they’ll probably be happy to receive some cash from you to help with relocation. If they don’t agree to move out, avoid language that may be seen as threatening. If you need to evict someone, it's important to use the appropriate legal channels and not try to take matters into your own hands. It’s illegal to prevent tenants from accessing or using their rental unit while bound by a lease agreement, so don’t be tempted to change the locks or shut off utilities to persuade someone to vacate. It will be to your advantage to be friendly and accommodating towards your tenants, even if they’re making it difficult for you to sell the property. Ensuring people feel cared for can go a long way in ensuring tenants agree to your terms.