Selling a rental property with TENANTS
Hey everyone, Brad from Georgia Probate Resource here. We’re a real estate solutions company based in metro Atlanta,but we purchase houses throughout Georgia. Our specialty is probate and inherited properties.
Today’s topic: selling a rental property with tenants.
This is relevant to probate and inherited situations, but it also applies to any landlord looking to sell a tenanted property. We regularly buy properties with tenants – it’s a common scenario. We’ve seen it all: evictions, cash-for-keys deals, great tenants, difficult tenants…you name it. As a landlord myself, I have personal experience with tenants in my rentals, and I also offer seller financing.
When selling a rental property with tenants, there are a few crucial steps. First, and this is often overlooked, notify the tenants that you’re selling. It’s also important to clarify the lease situation: is there a current lease, and is it up-to-date? If there is a written lease, ensure you provide it to any potential buyers, as it remains valid under the new owner. Sharing this information is essential.
As the buyer, I would like to prepare a document that is very common in commercial real estate, called a tenant estoppel agreement. It’s a document that is signed by the landlord, the tenant, and the buyer before closing. It outlines the terms of the rental agreement. Are you going to give your tenant a notice to vacate if you’re selling the property? We usually do this because I don’t like inheriting tenants, although sometimes I have inherited tenants and had some really good experiences.
I had one tenant who I inherited, and he stayed with me for a couple of years. However, usually, the previous landlord hadn’t done a very good job of screening the tenants, or maybe they didn’t meet my criteria for the property. So, typically, I prefer to find a new tenant or make improvements to the property and then re-lease it. Consequently, this significantly reduces the pool of potential buyers.
Focusing on ROI
Secondly, potential buyers for your tenanted property are likely to be experienced in real estate. They’re probably investors, and what matters most to them? Return on investment (ROI). As an investor myself, when I consider a rental property, it’s a simple calculation. I analyze the numbers to determine if my investment will yield a satisfactory return. If I invest $200,000, what will my rate of return be? If the return isn’t there, it’s probably not a wise investment.
If you have a rental property with tenants and you’re considering selling it, I’d be happy to help. I am a licensed agent with OneSource in Woodstock, and I can assist you whether you want to sell your property traditionally by listing it or if you prefer a fast cashout. If you want to discuss listing your property, feel free to reach out to me. Alternatively, if you’re looking for a quick sale without the hassle, we can make you an offer on the property. You can visit our website at probateresource.com to get in touch with us.
Thank you for your time. I’m Brad and I hope to hear from you soon. Have a great day! Goodbye.