If you want to sell your rental property but there are still tenants living in it, don’t expect a typical home sale. Selling a home that’s still occupied brings up a bunch of questions, regardless of whether you have dream tenants who pay everything on time or ones who avoid your calls.
Can you list the property right away? Do you have to wait until the lease is up? What are your legal limits? How do you avoid upsetting the tenants? Is this going to end up as a legal mess? And, there’s the big one – will having the tenants there help or hurt your chances of finding a buyer?
You want to sell the property with the least amount of drama, so it’s only natural to ask these questions.
Keep reading and you’ll get answers to all of them.
Know the Legal Lines Before You List
Before you can even think of listing your property, you need to get clear on the legal stuff, and that starts with the lease. If your tenant is on a fixed-term lease, you usually can’t ask them to leave early unless they’re okay with it. But even then, you’ll probably need to offer something in return, like cash for keys.
On the other hand, if they’re on a month-to-month lease, you might be able to end the tenancy with proper notice, but as far as how much notice and when you can give it depends on where you live.
City | Tenant Purchase Rights | Eviction Restrictions | Notice for Showings |
Dallas (Texas) | First right of refusal isn’t required by law. | Can evict without just cause. | 24-hour notice required |
Los Angeles (California) | First right of refusal in some rent-controlled units (check local regulations). | Just cause eviction required. | 24-hour notice required |
Atlanta (Georgia) | First right of refusal isn’t required by law. | Can evict without just cause. | 24-hour notice required |
Selling a house in Dallas, Texas, isn’t the same as selling it in Los Angeles, California, or Atlanta, Georgia. There are state and local laws to keep in mind.
Tenant protections vary a lot and in some places, landlords have to give tenants first dibs on buying the property, while in others, you can’t remove a tenant unless there’s just cause, like if they aren’t paying their rent or they’re violating the lease.
Even if it’s something as simple as showing the house to a potential buyer, there are legal limits. In most states, you have to give advance notice (typically 24-48 hours), and even then, you’ll have to coordinate directly with your tenant.
Laws get tricky fast, and the risks are real; you may want to think about speaking to a real estate attorney before you make any big decisions.
Selling While Tenant Stays Put vs. Asking Them to Leave
This is one of the biggest decisions you’ll face – do you keep the tenant in place or ask them to leave before listing?
If you have a stable tenant who pays on time and has a good amount left on their lease, it might make the most sense to sell the property while they’re still living there. You’ll need to find an investor for this, preferably one that looks for multi-family properties or rental-steady homes.
To make the sale easier, prepare the lease agreement, a rent roll, and any expense records so buyers can see the value right away.
If you’re hoping to open up the sale to more buyers, especially families or people looking for a primary residence, you can try offering your tenant a cash-for-keys deal. Basically, this means you’ll give them money if they’re willing to move out early. It’s a respectful, effective way to clear the property before selling.
Keep in mind, however, the tenant has the right to refuse or ask for more money than you wanted to give them. If you go down this path, make sure you get everything in writing to protect both sides. Don’t forget to check the laws before you ask a tenant to move early because some cities have really strict rules about how much notice you need to give and what kind of agreements are allowed.
The most straightforward route is to simply wait for the lease to end, but this might not be the fastest. Once the tenant moves out, you’ll have a clean slate to market the property however you want.
Just remember that empty homes can cost more money in the meantime, plus there’s always a chance you’ll need to make repairs after a tenant leaves.
Timing matters here, too. If your tenant’s lease ends in the middle of winter, it might be hard to find buyers right away because the real estate markets slow down during colder months. Having the tenant move out in the spring or early summer will give you better exposure and a higher sale price.
Conclusion
If you were expecting this process to be a walk in the park, you have another thing coming. But that doesn’t mean it will be extremely stressful. If you understand local laws and you prep for it, you can pull it off and keep everyone happy.
The most important thing is that you’re respectful and considerate to your tenant because they can make your life a living nightmare if they want to.
