Owning rental properties used to be a great thing. Everything has changed since COVID. Yet, selling a house with tenants is something that still needs to be done with care.
Having renters, or any type of occupants in a property you own has become very precarious today. However, that doesn’t mean that you can just kick them out and sell the property. Even if they are not paying.
This leaves the big question of how do you sell a house with tenants, and what the best way to do that is.
COVID & Never Ending Eviction Bans
The barrage of new rules, restrictions, policies and rules that came with COVID have changed everything that landlords thought they knew about real estate and rental properties.
First there were all of the new protocols and need to change methods of doing business that came with lockdowns and virus transmission.
Then came the eviction bans. Even after being ruled unconstitutional by judges, the president decided to institute and extend them again. Now there are eviction bans at multiple levels of government. Even if and when they expire, it is quite likely that well over a million evictions could take years to process.
Now those occupying other people’s properties really have zero incentive to pay the rent. Or to otherwise comply with their lease agreements and be good tenants.
To make matters worse, now some are pushing for what may be never ending eviction bans. As with the newly proposed Federal Disaster Housing Stability Act of 2021. If passed, this bill, or other legislation like it would automatically implement an eviction moratorium in a disaster. The problem is that there is no real telling how long those rolling bans would last. Nor what would be classified as a qualifying disaster. With conversations being thrown around now, that could be anything from a strong storm, to a virus outbreak, to homelessness levels and climate change to even renters simply not being able to afford the rent. Some are positioning evictions themselves as a crisis which unfairly impact people with a negative record.
Selling A House With Tenants
The above has created an incredible amount of urgency for property owners to sell their real estate.
Refinancing to fill financial gaps may be far harder today than it used to be. Yet, the most common type of buyer for rentals was other landlords, and they are running scared too. Regular retail home buyers looking for a place to live in are not going to want to take on a property that has occupants in it which they may never be able to get out.
The Rules For Selling A Rented Property
Even in the most investor friendly states landlords have a lot of legal responsibilities and rules to follow. This applies regardless of how occupants are acting, or if they have paid the rent or not.
The biggest thing to know is that selling a property does not end the lease or mean the occupant has to leave. The lease survives the sale.
This means that the next buyer has to take on that occupant, the responsibilities of being a landlord, and all of the liability that comes with it.
Another big thing for landlords with non-paying tenants is that they cannot stop providing the same quality of service. You have to keep up with all of the utilities, repairs and maintenance, and anything else you promised.
You cannot just freely spend their security deposit, or even show up too often and harass them. You may even be limited on the number of showings you can have for potential buyers.
The last thing you want is for them to haul you into court and sue you for damages.
How To Sell A Tenanted Property
With selling and cashing out of the liability the only really attractive option for landlords today, what is the best way to do that?
Why Sell For Cash Fast?
There are a variety of factors that have come together to make selling a house with tenants for cash directly to a qualified buyer really the only viable option.
One of these reasons is financing. Not many lenders are going to want to finance a property with a non-performing occupant in it.
Trying to list with a Realtor may be a nightmare. You may be limited on the showings you can allow them to do. You can bet the moment that agent sticks a sign in the yard that the occupant will cause you even more trouble. They may trash the place in ways that will completely boggle your mind, costing you tens of thousands of dollars. They will probably try to scare potential buyers away.
Each day the property is costing you money, and they may be devaluing it even further each day.
Not to mention that a rush of other landlords in similar situations, and changing market conditions could bring down the price you can sell the property for fast too.
Finding The Right Buyer
Finding the right type of buyer is going to be critical.
Firstly, you need a buyer who can follow through, and won’t end up backing out due to inspections or appraisals, or financing issues.
Secondly, you want an ethical buyer who isn’t going to turn around and try to blame you for the challenges they will face after the closing. You may even care that they treat your tenants well.
This means finding a true cash buyer who is experienced in taking on properties with tenants, and dealing with difficult tenants who may not be paying the rent.
Summary
Selling a property with tenants can be challenging at the best of times. With new rules, eviction bans, and possibly non-performing renters as well, selling can be even tougher.
Success is all about finding the right cash buyer.
Use our website to find out how much your property is worth today, and get a free no-obligation offer, regardless of your tenant situation.