Should I sell my tenant occupied home? This is a question many landlords ask themselves when their home is rented. While selling a tenant occupied home might be the right decision for some landlords it could be the wrong decision for others. If you are a landlord unsure if you should sell your tenant occupied home this article will help you determine what the right decision is for you.
What are the PROs to Selling a Tenant Occupied Home?
Appealing to Investors
An income producing property can be very appealing to investors. Especially if there is a great tenant in place who wants to stay and is paying market value for rent.
Even if a landlord doesn’t have a mortgage on the property there will still be expenses. Even if they don’t have a mortgage they’ll still have expenses like property taxes and homeowners insurance. So a huge plus to selling a tenant occupied home is it’s generating income. This income can be applied to the properties monthly overhead.
Two More Pros
Statistics show occupied homes can deter thieves and can also decrease the chances of vandalism. So a tenant occupied home versus a vacant home is another benefit.
Tenants usually cover all of the utilities. However, if the home is vacant the landlord will have to cover all of these expenses. Now, there are some owners who won’t keep the utilities on in order to save money, but it’s never recommended.
What are the CONs to Selling a Tenant Occupied Home?
Difficult to show
A majority of tenants do not want strangers walking through the home they’re renting. So they may make viewing the home impossible and put unrealistic restrictions on showings. Some of these restrictions might include a 24-hour notice. Others include not allowing a lockbox or limit the days and times the home can be shown.
Not Show Ready
Unless a tenant always keeps their home immaculate odds are they will not jump through any hoops to make the home show ready. In fact, some may intentionally not clean to deter prospective buyers.
Two more Cons
Since the property is tenant occupied there will most likely be a lease in place. If there is a lease the property cannot be sold until it ends or both parties are willing to terminate it. If a tenant won’t leave until the lease ends this may not work for a buyers time frame.
Unlike an owner-occupied property where a buyer is confident the seller will vacate the property that isn’t always the case when a home is tenant occupied. Depending on the situation some buyers are concerned the tenant won’t vacate the property prior to closing. Some are also concerned about the condition the property will be in. Will it be filthy? Will they take things that belong to the property?
Some tenants love to talk if they’re home for showings and depending on what they say can greatly impact the sale. A few might point out every single thing wrong with the property while others might say whatever they can to deter buyers even if it’s false information.
Deciding whether or not to sell a tenant occupied property is a big decision and the wrong decision can be extremely costly to the seller’s bottom line. I’ve listed and sold countless tenant occupied properties throughout my career and unless the circumstances are right it’s almost a guarantee the seller will lose money. My recommendation to any landlord who’s considering selling their tenant occupied home is to sit down with a top Realtor, discuss all of these pros and cons and how they will affect them, positively or negatively.
If you think this article, Pros and Cons of Selling a Tenant Occupied Property, was an interesting read please give it a share!
— Michelle Gibson (@WellingtonHomez) January 23, 2018
Additional Real Estate Advice from Top Professionals
- One of the biggest obstacles tenants present is restricted showings, requiring 24 notice. Not only do tenants do this, but sellers do to and Bill Gassett explains how it can negatively impact a sale.
- A majority of tenants won’t allow a lockbox, which Sharon Paxson discusses the pros and cons. However, not using a lockbox can drastically reduce the number of showings.
- Don’t just tell your tenants you’re selling the property. You’ll want to check out these excellent tips to selling a tenant occupied home from Kyle Hiscock.
- Buyers want to close on time and as Kevin Vitali explains sellers need to be prepared to do so. If their property is tenant occupied it’s their responsibility to make sure the tenants are out.