Selling A Property With A Tenant In Place? Here Are Your Options

Every day, investors decide they’ve had enough owning investment homes. They’d rather liquidate the investment and either enjoy their retirement savings or invest elsewhere. Sometimes it’s about the market - they found a better market to invest their money, and sometimes it’s about the work involved in being a landlord.

No matter the reason, if you have a tenant in place, you may feel stuck. You signed a lease, and now you can’t get out of it until it expires. 

You may have options, including selling the property with tenants in place. Here’s what you must know when deciding.

Wait For The Lease To Expire

This option requires patience and lots of it. If you’ve decided you’re done being an investor, you may feel stuck in a lease. If there are a few months left, it’s no big deal, but if it’s a newer or long-term lease, you’ll have to wait it out.

This is the least expensive option for sellers if you look at the surface, but there’s a downside. What if the market drastically changes and you can’t get what you wanted for the home any longer? What if you lose money?

Consider the pros and cons of waiting for the lease to expire.

Pros

• You end your investment on a good note, letting the tenant stay in place until the lease expires.
• You have time to prepare your selling strategy, finding the most affordable option, so you walk away with the largest profit.
• You don’t have to interrupt the tenant to fix the home up or ask them to let buyers view the home.
• There’s no worry about you breaching any legal contracts.

Cons

• You have the carrying costs of keeping the property when you’ve decided you’re ready to move on.
• It’s your responsibility to keep up the home and handle any emergencies since you’re still the landlord.
• The market could change for the worse, and you may make less profit when you’re able to sell the home.

Buy The Tenant Out

Another option is to buy the tenant out. This happens in hot real estate markets where investors want to get out while making a great profit or when buyers want to buy the property now before prices increase.

This is the most expensive option when selling a property with a tenant in place. You may pay the tenant tens of thousands of dollars depending on the market. This depletes your profits or hurts your offer from the buyer if the buyer pays the tenant off.

Consider the pros and cons of buying the tenant out.

Pros

• You can sell the home sooner and move on with your life however you planned.
• You may be able to take advantage of a hot seller’s market if prices are high where the property is located
• You don’t have to wait for a lease to expire since you can sell on your terms. 

• Cons

• You may make lower profits after taking away the money paid to the tenant to leave the property early.
• There may be a smaller buyer pool if buying out the tenant is part of the agreement.
• The tenants may not agree to the offer.

Sell An Occupied Property

The final option is to sell an occupied property, otherwise known as a turnkey property. In this case, you don’t have to ask the tenants to leave or wait for the lease to expire. You get your cake and can eat it too.

When you sell an occupied property, you sell it as-is, including with the tenants in place. The new landlord (buyer) takes over the current lease, and nothing changes for the tenants except where they send their rent payment.

Consider the pros and cons of selling an occupied property.

Pros

• You can sell the property as soon as you are ready. You don’t need money to buy a tenant out or to wait for the lease to expire.
• The tenants are uninterrupted and can carry on in the home they love, just with a different landlord.
• You may get a higher price for the home since you don’t have to factor in the cost to buy the tenant out.

Cons

• You may have a smaller buyer pool since not everyone wants a home with tenants already in it. They’d rather do their own screening and choose tenants themselves.
• Your tenants may not be happy about the changing of the guard.
• It may seem harder to list the property since most buyers look for vacant properties.

How To Sell An Occupied Property

If selling an occupied property appeals to you, there’s a simple way to make it happen. Roofstock Marketplace is a platform for real estate investors (buyers and sellers) that lists property with tenants.

If you have an occupied property, you’ll have a larger buyer pool and more support if you use Roofstock Marketplace. 

How Roofstock Works

If you’re wondering how Roofstock helps you sell a home with tenants in it, we’ve broken down the process for you below. It’s a lot easier than most people think.

1. You Submit Your Listing To Roofstock Marketplace.

Roofstock Marketplace makes it easy to submit a listing. You provide information about the property and some great photos, and they do the rest. They use the information you provided (including the pictures) to come up with a fair price to see if you’re interested. 

Ultimately, you’re in charge of the listing price, but they’ll provide you with their input (they are the professionals) to help you see how much you might get for the home from the live market.

2. Roofstock Does Their Due Diligence.

Here’s where Roofstock really shines. They do all the work for you to get your home listed. They provide buyers with so much information that there’s no way they’d look elsewhere.

Roofstock Marketplace’s due diligence includes:

• Property inspection to ensure buyers the property is in good condition
• Title reports ensuring the property doesn’t have any liens on it
• Rent and financial analyses

3. Publish Your Listing.

After completing all the legwork, Roofstock publishes your listing for its large audience of real estate investors to discover. Roofstock even offers an Open House listing that is like a ‘boost’ to your listing, putting it in front of hundreds of potential buyers at once.

4. Accept and Negotiate Offers.

All work goes through Roofstock, including the offers. Buyers can submit offers just like they would with a real estate agent, and you (the seller) have the option to accept, decline, or counter the offer.

5. Close on the Sale.

Once you accept an offer, it goes through processing just like any other sale transaction. The buyer secures financing, and you do your side of the necessary seller paperwork and due diligence. At the closing, the buyer takes possession of the home, you get the proceeds from the sale, and the tenants have a new landlord.

The Benefits Of Roofstock For Sellers

Why would sellers use Roofstock Marketplace to sell their property versus waiting for the lease to expire or even buying out the tenant? Here are the top benefits. 

• You don’t have to interrupt the tenants. Business or not, tenants are people, and you likely care about them. Asking them to leave early or pestering them while they live there so you can get the house ready to sell isn’t the best form of customer service. If you use Roofstock and sell the property with tenants, you can leave the tenants alone.
• You’ll save money. Today, real estate agents charge 6% of the sales price in commission, and the seller pays the fee, not the buyer. Roofstock charges only 3%, so half of the cost of using a real estate agent, and they offer more services and support in finding the right buyer.
• Roofstock offers buyers the chance to partner with one of their property management companies, so buyers don’t have to worry about managing the property themselves. This opens up your buyer pool to more buyers since people can buy the property from anywhere in the country.
• Roofstock handles all the legwork, so you have less contact with the buyer. The entire process is easier, knowing that Roofstock will handle all the details. All you have to do is answer to Roofstock, and you’ll sell your property easily (and it will cost less).
• The buyer earns cash flow on day one. This can be a good selling point for buyers. Knowing that they don’t have to look for tenants or have carrying costs can be a way to attract buyers.

• The Challenges Of Selling An Occupied Property

Roofstock can help. 

Smaller Buyer Pool

Investors often look for vacant properties and don’t even think about looking at properties with tenants in them. If you sell with a traditional real estate agent, you may not get the right audience. 

With Roofstock, you market directly to buyers looking for properties with tenants in them. They know they are getting a property with renters and can see the analysis to determine if it’s the right choice.

Buyers May Want To Choose The Tenants

Some buyers may be wary of inheriting tenants. They didn’t get to screen them, so they worry they may get ‘bad’ tenants. With Roofstock’s help, though, they can determine the type of tenants based on their payment history and even the time in the home. Roofstock goes above and beyond to inform buyers properly.

You May Get Less For The Home/h3>

If you’re marketing to a smaller audience and there are ‘negatives’ to the property, including tenants, buyers may negotiate the price lower. When you work with Roofstock, though, you’re working with buyers who want properties with tenants in them and who understand the value of earning cash flow from day one. They also appreciate the lack of work necessary to find tenants.

Roofstock Helps You Sell A Property With Tenants In Place

If you have a home with tenants in it, but you’re ready to move on, consider working with Roofstock. You’ll market to the right audience and may sell the home just as fast as if you had a home without tenants.

Roofstock does all the heavy lifting - all you have to do is provide them with the property’s details, and they’ll do the rest. Buyers appreciate the due diligence Roofstock does, so they understand what they’re getting and can make a solid investment decision that may result in you selling your home for the price you wanted and in a short amount of time.