Can you sell your property with a tenant in it?

Question

My property appreciated around 100k in just 2 years, which I bought with a VA loan with 0 down in Colorado Springs. I turned it into a rental and currently it cashflows $108 monthly after all operating costs. I want to take my profits and purchase a multi family in Florida with a much better ROI. If I refinance, I’ll be able to get 90k, however I’ll be negative $300/month. Would I be able to sell the property even though the lease is 5 months from ending? Should I just wait and pass on this opportunity? Thanks in advance!

James Carlson · Answer

@Matheu Santos

We've definitely had our clients sell and buy homes with tenants in them in both Denver and Colorado Springs. As others have said, it's just a little more difficult. You're reducing the buyer pool significantly. While there are a lot of investors out there, the vast majority of buyers are owner-occupants. All of them will be required under their mortgage terms to occupy the property within 60 days, so being 5 months out is a non-starter for those folks.

That said, you have options:

-- You could list your property about 90 days out from the end of your tenant's lease and get more interest. You list it and get it under contract. A typical closing period is 30 days, so you'd close with 60 days left on your tenant's lease. You'd serve them notice to vacate at the end of their lease term, and the new owners would take possession within 60 days, per their mortgage requirements.

-- If you really want to sell sooner, then offer your tenant some incentive. Maybe $1,000 to vacate early. If you're walking away with $100k anyway, maybe that $1,000 (or whatever it is) is worth it to you.

Or heck, just wait till your tenant is out, clean it up, make it look nice and sell then. You're likely to get more doing it that way, anyway, but sometimes a quicker timeline matters more to people.

Good luck!

Greg Scott · Answer

Yes.  I have both bought and sold properties with tenants in place.

That said, you may have a hard time finding an investor-buyer.  They will also be looking at -$300/mo cashflow.

My favorite way to sell a rent property is to sell to the existing resident.  Because you don't have any rehab, holding time, or agent commission, you can give them a substantial discount off the price and still be better off than you would selling after they moved out.  And, if closing gets delayed, you are still collecting rent!  It is as win, win.  Hopefully your resident is interested and could qualify.

Taylor Dasch · Answer

You can sell a property with a tenant in place, however I have found that it is typically not ideal unless you have a good tenant in there. Yesterday, I had a tenant follow me around through a showing, listing all of the things that are wrong with the house many of them did not make sense or align with the actual damages if that makes sense. That might be the only reason why I would personally wait to sell any of my properties since when the property is vacant you can show it at any time and it is guaranteed to be show ready.  Also you will have a wider variety of buyers because a lot of buyers do not want to have to wait 2-5 months to move into a house if they are not investors.

Eliott Elias · Answer

Yes. The new owner inherits the tenant and has to abide by the lease in place. They could buy out the tenants lease as well

Can you sell your property with a tenant in it?

Most Popular Reply