So, you think it’s time to sell your rental property, there are two main courses of action you can take as a landlord. One, you can wait for the lease to expire before selling, or two, you can sell while your tenants are still living in the home. There are pros and cons to both options. Let’s take a look.
In Spokane, the real estate market is booming, which means that landlords, like yourself, who may have been holding onto a property while they waited for their home values and equity to increase could be thinking that now is finally the right time to sell.
Of course, if you are a landlord selling a house, there are probably people currently renting it from you. Selling with tenants can be a major challenge, and a tenant can either make or break your ability to sell your property. It’s important that you plan well in advance. I recommend communicating openly with your tenant. In the end, you may have to make some compromises in order for your sale to be a success.
Let’s explore the pros and cons of each option.
Choice 1: Wait for the lease to expire
Here are the Pros
Waiting for the lease to expire can give you time to make updates. If you’re able to wait for your tenants to move out, then you’ll be able to clean it out. You can do any cosmetic updates, and really get your home in tip-top shape before listing. This may help you snag a higher sale price.
Also, waiting can remove any timing issues with closing. This is especially true if it’s a single family home and a retail buyer is the one purchasing. In a hot real estate market, the home could sell quicker than you expect, and depending on the terms of the lease, you may have trouble getting your tenants out in time. If the home is vacant when you list it, you can accept the best offer and never worry about timing.
Here are the Cons
Waiting for the lease to expire will mean you are on the hook financially for the mortgage payments. If it takes a few months to prepare your home for sale, list, accept an offer, and close, you’ll be responsible for the full mortgage costs.
Choice 2: Sell with tenants in the home
Here are the Pros
If you sell your home with tenants there, then you get built-in staging. Buyers have an easier time picturing themselves living in the home when it is furnished. Now, If your tenant has taken good care of the home and they have nice decor, it will likely be more desirable to potential buyers.
Investors will be attracted to having tenants currently in the property. You can imagine that having tenants currently leasing the property is a big selling point for anyone who might be looking to buy the home as an investment property. This may be doubly true for multi-family properties. You’ll be saving them the hassle of finding a tenant!
Here are the Cons
Showing a place can be difficult with disgruntled tenants. Look at this scenario. You tell your tenants they have to move out. After that conversation, now you expect them to keep the home showing-level clean and accommodate showings and possible open houses. You can Imagine that this can be a difficult pill to swallow. The tenants may act unpredictably and this can have a big impact on how the house shows.
In order to persuade your tenants to cooperate with your listing plans, you will need to open the lines of communication. When you are able to have a healthy back and forth you will come to a conclusion or compromise that works for all parties. Start with the intent of finding a win/win situation. Then, take the appropriate action and get with your real estate agent to go over all of the fine details like local legislation and preparing your home for sale.