Selling A House with Tenants
It's stressful being a landlord at the best of times, but when the time comes for you to sell your investment property and move on, the stress can feel palpable. You've probably spent time getting to know your tenants and have built a relationship with them, and most humans don't deal with change all that well. Springing the "guess what, I'm selling your residence out from under you" conversation can feel like a big deal, even if everyone involved knows that isn't really what's happening. If you own a home with tenants in it that you want to sell, what do you need to know and address? You can still sell your house even if there are tenants living in it ... The good news is this: You have the legal right to sell your property, even if there are tenants living there. It's your house and your decision to make, and if you want to sell it, that is well within your purview. That said, there's a good way to go about selling your home with tenants, and there are a lot of ways that generate resentment and a lack of cooperation and that generally are not pleasant or fun for anyone involved. You do have the right to sell your house; your tenants have rights, too. To make this a tolerable process for them -- and, frankly, to get the place sold faster and for more money -- you'll need to solicit your tenants' cooperation. ... But in most states, they can stay through the end of their lease One of the rights that your tenants have is to stay in the property until the end of their lease. This applies to both month-to-month leases and fixed-term leases for longer periods of time, such as six months or one year. Selling a rental house with a month-to-month lease is relatively easy; refresh your memory as to the terms of your lease agreement and give your tenants the appropriate notice that you will not be renewing the lease when it ends. This could be anywhere from 30 to 60 days, depending on how your lease is written. Selling a rental with a fixed-term lease can be a bit more complicated. It's possible that your tenants' lease might not be up for several months, and if you really can't wait for them to vacate before buying, then you'll need to work with them throughout the sales process, and they will stay on in their residence after it's sold. Can you wait until the lease is up? Depending on how long is left on the lease, you might be able to just wait until it's up, gives your tenant the appropriate amount of notice that you won't be renewing the lease and need them to vacate, and then put the home up for sale. Simple! Unfortunately, in some circumstances, the tenant may have more than six months left on the lease, and you may truly need the house to sell as quickly as possible. If you can't wait until the lease is up, you'll need to have a conversation with your tenants about the sale. This should probably be an in-person conversation, followed by a formal letter -- but the in-person conversation will give you an idea of what you'll need to do to incentivize your tenants to be cooperative, which could mean the difference between an immediate sale or a listing that lingers and lingers. Decide how you're going to market the property Most sellers who are trying to offload a rental property have a couple of different options for how to market the home. They can sell it as an investment property -- in which case, an established tenant is a distinct plus -- or they could sell it as an owner-occupied home. Investors won't mind at all that the property has a tenant; in fact, they might consider it a reason to buy in and of itself. You can market the home as both; that's also an option. There are some traditional buyers who won't be moving immediately and won't mind waiting out a lease, so limiting yourself exclusively to investors isn't necessarily your only possible path forward, especially when the lease is less than 60 days from expiring. Work with your tenant on appropriate showing times It's important to remember that you are the person in this relationship who desires the sale. Your tenants probably have a lot of feelings about it, few of them positive; they are likely anxious about the future, unsure of where they will move or whether they will have to, sad about the loss of their residence, and more. So if you want them to cooperate to the best of their abilities, you will need to make this process as easy as possible for them. The first thing to do -- and possibly the most important -- is to ask your tenant about their schedule. When would it be convenient for them to open their residence for showings, and when are the incredibly inconvenient times? Do what you can to limit showings only to the times that tenants have indicated are convenient for them. Buyers who are motivated will be willing to clear their schedules to see a house that might be a fit, so you can feel free to give your tenants some control over the scheduling. Offer to pay for cleaning, lawn maintenance, or both Another big pain point for your tenants is going to be keeping their residence looking showing-worthy just in case a buyer wants to stop by. This is difficult enough for sellers who are motivated to offload their own residence, but when you're a tenant who doesn't have a choice in the matter and you're not going to see any financial benefit from your behavior, why would you be inspired to spend almost all your time outside of work keeping up with your house? One way you can show your tenants that you care about their experience in this process is to help them out by hiring cleaning or lawn maintenance help -- or both -- to help them keep up with the showings and alleviate some stress. Yes, it's going to cost you some money, as will a few of these suggestions. But is it better to spend some money upfront and sell the place more quickly, or to pinch your pennies and allow the home to languish on the market for months? At that point, you may as well wait for your tenants to vacate if you're not willing to do anything to hasten the process. Provide 24 hours' notice for showings Different states have different requirements for how much notice you need to give tenants about showings, but a good rule of thumb that's acceptable in all states is to provide them at least 24 hours' notice. Make sure that all buyer's agents know this is the case, and don't acquiesce to pleas to squeeze someone in at the last minute. It could be illegal, it will very likely leave a bad taste in your tenant's mouth, and you could wind up with an uncooperative tenant on your hands as a result. Arrange for the tenant to leave during showings Tenants might not be intrusive when possible buyers are walking through the house, but it's still pretty awkward to try to look at a place with the current occupant present. Talk to your tenants about options for things they can do while buyers come by to look, and do what you can to make those options easy for them. Maybe spending some gift cards to a local coffee shop or brewpub would be welcome ways for them to spend the hour or so they have to vacate the premises? Send them on a mini-holiday for the open house Planning on having an open house over the weekend? What will your tenants do during that time? Maybe you can offer them a night or a weekend away in a nice hotel while you host the open house. This is an opportunity for you to get a bunch of buyers in the house at once, especially if the open house is a significant part of the marketing campaign you've established with your agent. Do whatever you can to make it as good as you can make it -- and as comfortable as possible for your tenants. Help the tenant find a new place to live As a landlord, it's possible that you have more than one property in the area, and it's also possible that you may have an opening in a residence that would suit your tenant perfectly. If that's the case, you can absolutely present that offer to your tenant. Ask if they'd like to see the new residence, make time to show them around, and if they agree that it would be a good fit, maybe offer to help them move, too. If there's a price difference between their current place and the new one, you might be able to do some negotiating or use it as a bargaining chip. Even if you don't have any other homes that might be suitable for your tenant, you might know other landlords or property managers in town through your own business. Reach out to them and mine your network to see how you can best situate your tenants. They'll thank you for it later! What if the tenant is behind in rent? In an ideal world, you could ask your tenant for the rent owed, collect it, then sell your property with no further issues. But the world we live in is not ideal, and a tenant who owes rent already isn't exactly a selling point when you're trying to offload a rental property. In fact, it's a liability! There are a few ways you can tackle this problem. You could tell the tenant you will forgive their outstanding rent if they agree to move out immediately. You could try to put them on a payment plan that will help them get current by the time the sale happens. Or, depending on how far behind they are, you could start the eviction process -- which isn't fast or easy, but if there are no other options, it may be your best one. Consider 'cash for keys' This term refers to a practice of giving tenants money to move out early. Sometimes landlords do this when the tenant is a problem -- for example, not paying rent, or antagonizing other neighbors. It's essentially exactly what it sounds like: You approach the tenant and offer to pay them to leave. Your tenant doesn't have to be a problem tenant to use this strategy when you know you want to sell. If you're pretty sure that your tenants would cause problems in the sale, and you can't wait for their lease to end, ask if you could pay them one month's rent and their security deposit, or whatever seems reasonable to you, if they would break their lease and vacate early. You can also offer additional incentives, like paying for a moving company to help them make the move. This might seem counter-intuitive, but if you really need the place sold and you're out of other options, it can be the best solution to your problem.
Shopping for Vacation Rental
Planning to stay in a hotel for your vacation is so '90s. The emergence of the internet and websites like Airbnb, VRBO, TripAdvisor and more have made it possible for travelers to feel right at home in a new city ... because they're staying in someone else's home and renting it for vacation. Vacation rentals are a great way to get to know an area like the locals do. They're often more spacious than hotel rooms, and unless you're booking a hotel suite, you'll also typically have access to amenities like a full kitchen. Of course, there's always a risk to using a vacation rental instead of a hotel -- for example, some rentals might not have internet access, some might be inconveniently located for what you want to do, and there are people posting homes that aren't really theirs and taking money as part of a scam. (This is much more popular on open websites like Craigslist than targeted ones like Airbnb, for what it's worth.) How do you make sure that you're choosing the right spot for your vacation experience? Here's a quick guide to how to find the right vacation rental for your visit. Decide where you're going Maybe you want to ski in Tahoe or sun yourself on Miami Beach. Before you can start seriously looking at vacation homes to rent, it's smart to decide where you want to go for a vacation and what you want to see and do while you're there. This seems easy, but most of us have several places we'd like to go given enough time and money. The key is in prioritization -- and consulting your fellow vacationers, of course. Make a list of any places you wanted to go that didn't make the cut and save it for the next vacation. Decide what you want in a rental Sometimes you can find a great deal on a vacation rental that will save you hundreds of dollars on your vacation ... but that rental might be located miles and miles from any major attractions, meaning you'll either have to rent a car, take public transportation (if available), or take on another expense to get where you want to go.By contrast, a place right on the slopes (or the shore) might be more expensive than the other options, but you're paying in part for convenience. Is that something you're willing to do? Make another list of the features you must have in your vacation rental, from location to a number of beds to whether you need an internet connection. Think about how much cooking (or not) you'll want to do, whether you want to be close to restaurants or public transportation -- in other words, make a list of your ideal vacation rental for this trip. One nice thing about platforms like Airbnb and VRBO.com is the filter application; you can include your must-haves and the search results will only generate vacation rentals that meet your exact criteria. So it pays to decide what those criteria are before you jump into the search. Plan ahead If you haven't already selected dates for your trip, start checking to see what the busy and slow times of year (or season) are for the area where you want to vacation. Maybe you want to hit a big event that's going to be insanely popular. In that case, start planning as early as possible, and book your rental as early as you can, too -- the rates will only get higher if you wait. If it doesn't really matter when you go, try to plan around any big events that could boost prices while you're in town to find the best deal possible. Google Map it Once you start looking at actual homes, do yourself a favor and check out the neighborhoods and streets where those homes are located. You might find something that's lovely and impeccable on the inside, but if the general feel of the area doesn't seem safe or polished to you, then maybe you should pass. Pay attention to major thoroughfares and attractions, too, so that you know there's a highway behind the home that might keep you up at night or a concert hall that might be a little loud down the street. The maps can also show you quickly which retail stores and restaurants are nearby, where the vacation rental is in regard to public transportation, whether the sidewalks are clean and well-maintained or trash-ridden and cracking -- you can learn a lot from this step, so don't skip it. Read the reviews Airbnb, VRBO.com, and other reputable vacation rental sites will have a review section -- don't ignore it. Those reviews are written by other vacationers who stayed in the home. They often report on things like cleanliness, noise levels, whether the photos were representative of the home -- all things you'll absolutely want to know before you fork over money for a week in the place. You can also see (to an extent) who left the reviews, how often they travel, how highly their own hosts rate them (a bad review from a poorly rated guest can probably be safely ignored), and then decide from there how valid you think their opinion is (or is not). Ask about amenities Is there wifi in the vacation rental? That might be something you can filter out with search results, but other questions might not have handy answers -- like, "do you make towels available for beach use," "can I park in the garage," and "is there a Nespresso machine in the kitchen." Look at your list of must-have criteria and ask yourself if you can confirm that the vacation rental has (or does not have) the items on that list. If there are any missing, ask the host about them. It's possible that accommodations could be made, but you'll never know unless you ask! Ask about fees Will your host charge for additional guests, and what's the standard nightly cleaning fee? Can you access the vacation rental's pool, or does that cost extra? When you're close to deciding that this is the right place for you, contact the host (if you haven't already) and ask about any additional fees or costs associated with staying there. Not only will this help you budget, but getting an answer in writing can also protect you from any unknown charges if the host is an unscrupulous sort. Better safe than sorry. Solicit suggestions for things to do Most good hosts will do this without asking, but it's always nice to ask the people who own the home (and have presumably lived in it) for tips on things to do and how to make the most of your time in the area. Some good questions to ask hosts if you can't think of any yourself: What's your favorite place to eat in the area? What route do you talk about when you want to take a walk? Where do you go when you want some quiet time outside of the house? Where do you go when you want to meet new people? Where can you find the best live music in the neighborhood? What's the parking situation like? (If you have a car.) What activities for kids or families are available? Is there anything I should know about the neighbors? When you take the time to plan ahead, finding (and renting) a vacation home, even if for the first time, is both easy and rewarding.
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