Can I sell my house with tenants

Question

Can I sell my house with tenants managed by a realtor/property manager. Due to my situation I made a mistake but renting my house when I moved out.

I always wanted to be in real estate as an investor rather then home owner. I stumbled up bigger pockets after I made my mistake.
What's the law in California if I wanted to sell my house. Also my tenants just moved in beginning of December. I don't want them coming after me legally if I sell. So far mostly people are telling me I'm probably stuck until their lease is over.

meanwhile I also need to pay down my debt and improve credit score.

Caleb Brown · Answer

You can sell with a tenant. It makes it a little more complicated with showings but the PM and agent can help make that easier. Keep in mind you will be selling to an investor so the pricing won't be a high as a vacant property. If you can I would have professional photos done to make it easier. Tenants don't like to be bugged so I always try to be as nice as I can when I help a client sell with a tenant.

Noah Laker · Answer

You absolutely can, it will just limit the buyer pool a little bit!

Patricia Steiner · Answer

Here's the issue...in most states, if the tenants have a lease, the new owner will be obligated to honor the lease - as is - until end of lease.  If the property is not cash flowing and is due to your mortgage carry, it will most likely require a cash buyer to work (or close to it).  I would recommend having a conversation with your tenants and letting them know of your interest in selling the property to gauge their interest in terminating their lease early - or if you have a termination clause, invoke it.  Tenant occupied properties can be attractive to investors if cash flowing...no one wants to buy someone else's problem.  Do your homework. You don't want to sell at a loss either.

Best.

Drew Sygit · Answer

@Nitesh Chand check your state & local laws!

If you proceed, understand you will most likely GET LESS for your property with a tenant as opposed to vacant.

Why?

Because someone looking to live in the property will pay more because it's usually an emotionally drive decision. While someone buying it with a tenant is typically looking solely at the ROI numbers.

Also, find an agent experienced in selling occupied rentals! Your first clue will be how they approach showings. An experienced agent will list your property with the language, "no showings until an accepted offer", to avoid violating your tenant's rights to the peaceful enjoyment of their home - possibly resulting in their lack of cooperations and a lawsuit against you.

Matthew Paul · Answer

sell it to the tenants

Kristian Sexton · Answer

@Nitesh Chand Does your lease agreement with these tenants include verbiage for if you sell? I know our lease agreement does. I would reach out to the Property Management Company because their portfolio of properties includes the investors that own the properties. We sell with tenants in place all of the time. It makes it much easier to entice an investor if it's already got a guaranteed tenant in place. Does that make sense?

Alan Asriants · Answer

What was the mistake? Are the tenants the mistake?

If the tenants are the issue, they can make it very difficult to show the property and this can create a lot of issues for you during this time.

It will also prevent you from selling your home for maximum market value as only few people will want to deal with holdover tenants. Ultimately you will have to sell your house at a discount.

Long story short, you can, but since you are only targeting investors, your sale price will likely be lower than comps.

Talk to a local agent about your local tenant laws and have them review their lease

Nitesh Chand · Answer

@Kristian Sexton I don't know yet. The only problem with selling while occupied is that I have a huge negative cash flow. I rented it out to save the house when I move out and I'm out of pocket $1,300 every month towards the mortgage. So I would assume this isn't an investment property and more likely will attract home owners rather then investors.

Nitesh Chand · Answer

@Bradley Buxton I don't know if this will be a good investment property for an investor. I bought this house brand new as my home, but I had to move out. I'm out of pocket $1300 each month to make up for mortgage.

Bradley Buxton · Answer

@Nitesh Chand

Yes you can sell with tenants. We do it up the hill Reno and with a good agent they can give you all the options and guide you through the process. Ideally they will have a pool of investors looking for a turn-key property.

First check the lease. Are the tenants paying market rents? If not it might be better to wait. Another option is give them and option to buy out their lease. Pay them an agreed upon amount and they break the lease and move out. Anyone viewing the property make sure they are property vetted with lending in place. Maybe even have an offer before viewing. Communication with the tenants is key. They are not going to like living in a house that is going to be sold.