Originally posted by @Jesse T.:
Are they violating part of the lease? Is there any language regarding following homeowner's associations rules?
In some ways you don't have much to lose by putting the property on the market now. You obviously won't get top dollar, but it might be worth it getting yourself rid of the headache.
If you don't get an acceptable offer, you can either try cash for keys or waiting the tenants out. I would definitely make sure you have at least a few months between listings, so the lack of interest doesn't impact listing it in top condition.
They are routinely violating then remedying parts of the lease. For example, the lease requires that they comply with the HOA rules. One HOA rule says no storage of trash bags in the driveway (must be in containers). So I'll get a warning/fine from the HOA, notify the tenant they have 5 days to remedy the problem, and by that time trash day has rolled around and the trash bags are gone. But then next week, it repeats itself. The trash bags are out for 2-3 days but not more than 5 days to trigger an immediate termination of the lease based on failure to remedy.
Same goes for noise disturbance. They blast their ghetto music at volume 11. The neighbors complain. I notify the tenant that they are disturbing the neighbors and to stop it. They stop it. But then next weekend they're blasting ghetto music again.
I hear what you're saying about listing the property while it's occupied, and I'll probably do that. I'm losing -$700 each month the house is rented, which is a lot better than losing -$3,000 a month. I'm renting it out to slow the bleeding. But in 6 months when the lease ends, I will have lost -$4,200. So the question is -- if I sell it now as tenant occupied, will I not lose more than $4,200 than if I was to wait until the winter? The winter is the high-season and would be the time to get top-dollar. For a $600,000 home this could be quite a significant difference. Based on recent sales and current inventory, I'm thinking ~$580K now as-is, damaged, messy, dirty, in the low-season, tenant-occupied, vs. ~$630K in the high-season when it's empty, clean, and restored to pristine condition. A pristine house in the neighborhood (same model as mine) sold for $645K at the tail end of the high-season. Currently all the houses are listed for $550K-$590K.
Because it will probably take 3-4 weeks to clean and repair the house after it's been abused by the tenants who are due to move out Nov 30th, I will be missing 25% of the high-season which runs from mid-November to mid-March. I probably won't have it restored back to it's original condition until late-December.
That's why I want the tenants to move out sooner. If they would move out September 30th, that would give me 6 weeks to get it ready for sale for the high-season.