Selling A Rental With Existing Tenants

[Lynn B.]

A few weeks ago, I was eager to begin the process of renting to an acquaintance who requested to rent my parent's property as it would have been additional income for my parent as well as cover expenses (no mortgage).  The tenant admitted that his credit wasn't good, but I was going to give him a chance anyway. The house is nice, but in a low value area. I changed my mind about renting after receiving a caveat from a property inspector who inspected previous homes rented by this potential tenant, and described him as being "dirty". My problem is that this acquaintance continues to beg to rent the property even AFTER a recent shooting sent a car into the property damaging a railing and step. I still want to sell as I am fearful of having to constantly visit the area. Also, I'm told that we will have to pay a tax if we rent and then decide to sell without living in the home for two years.  The home may take a while to sell, so renting it would pay taxes and keep the home from looking vacant.  This renter is persistent. He's self employed with a business in the area. He's not afraid to live there, he knows the neighbors.  Can you rent out your home and place it up for sale at the same time? Do investors want houses that are already rented out to tenants? 

[Stephen E.]

You have several issues to manage. First, the prospective tenant. He is persistent and potentially a pest. He is also independently described as living  in dirty conditions in a series of properties and is known for this. All of these characteristics rule him out of the tenant pool in my view. There are better tenants and if you decide to go this route you should find one by going out and marketing the property properly and seeking tenant applications. But before doing so you have to face the next issue which is that you may want to sell the property but may have to do work to bring it up to standard. The last poster puts this clearly, you may need to have the property vacant to do this work depending on the extent. Do too much work while it is occupied and you could be held to have interfered with the reasonable enjoyment of the tenant.

Finally, sale. Is it possible to sell now as is? How much would repairs cost? Would they bring a corresponding appreciation in price? Just how long do you want to hold onto this property? You seem undecided but you also seem like an accidental landlord. Unless you have confidence in your ability to oversee repairs I would seriously investigate sale now. Have you consulted with realtors as to current value and repaired value? Time to have a substantive discussion with your parents about what they most want to happen and what is practical in the circumstances.