Selling a rental property with tenants

[Preeti Sampath]

Hey everyone, 

We are thinking about selling our Single Family Home Rental. We have had tenants (really good ones) for 2 years now and they are wanting to extend the lease. But Denver market is peaking and we are thinking of selling it. Can someone advise me what should I do if I want to sell it to another investor or someone who is looking for a home but can wait to move in? 

Also, any recommendations on how to communicate that to the tenants if they have to accomodate any showings.

Thanks in advance
Preeti

[Joe Funari]

@Preeti Sampath I would strongly recommend you terminate the lease with your tenants and have them move out before you sell the property. I speak from experience listing properties with tenants in place is very difficult to show the property. Also, having tenants in place your only to sell to investors. But many experienced investors will not place offers because they would prefer to place their own tenants. They do not know your vetting practices for tenants. Plus, having tenants in there on a lease longer than a year means that rents are most likely undervalued. Yes, I am making a lot of assumptions here. But having a vacant property to sell allows you to market a much larger pool of buyers. So rather than communicate with your tenants any showings I would give them notice to vacate at the end of their lease. Also, check with laws in CO regarding selling a tenant occupied property. Here in Texas we have to give tenants first right of refusal to purchase the property at fair market value before listing it. If you don't know the law in this regard find a Realtor that is a fellow investor there in Denver. They will gladly know how to communicate this with your tenant and take care of it.