Selling a Rental Property With Tenants

by c21commonweath_ldowling 5. August 2019 14:02

Home prices in Boston have been on the rise year after year, making Boston a sellers’ market—but if you’re selling a rental property with current tenants, you’ll have to work harder to take advantage of the favorable climate. Take a look at some strategies for a stress-free rental property sale.

Consider Your Options

As a landlord, you have two options for selling a rental property: You can put it on the market while tenants are living there or wait until after the lease expires. There are pros and cons to each option, so think about which one best suits your timeline and budget. 

Sell with Tenants in the Home

There are several advantages to selling your rental property while your tenants still reside there. If they’ve done a nice job of maintaining the property (with attractive furniture placed throughout), it may look more appealing to prospective buyers. Investors will also be relieved to know they don’t have to find new tenants to occupy the space. 

If you can’t rely on your tenants to keep the home in great shape or clean up their messes, however, you’ll likely have trouble showing it off to buyers. 

Wait Until the Lease Expires

Waiting for the lease to expire gives you extra time to clean and make repairs before buyers tour the place. If you’re selling to a party that plans to move into your house themselves instead of using it as an income property, letting your tenants’ lease expire first means you won’t have to worry about negotiating for their exit before the buyer moves in.

Of course, the longer your house is on the market without tenants paying the bills, the more of your own money you’ll shovel into mortgage payments. 

How to Approach Your Tenants

If you’ve decided on canceling your tenants’ lease agreement before the sale, it’s in everyone’s best interest for the relationship to end amicably. First, you should review the lease agreement to make sure you give proper notice and avoid breaking any agreed-upon terms. Month-to-month leases usually require a 30-day notice—a more thorough read-through of Massachusetts rental agreement notice requirements can be found here.

After you’ve studied your lease agreement, respectfully communicate the situation to your tenants to reduce the chances of trouble or hurt feelings. You can offer to lower rent for a month or two to persuade them to keep the house in tip-top shape before a showing, or if they’re really in love with the house, you can even offer to sell to them.

Massachusetts Landlord-Tenant Law

Massachusetts landlord-tenant law is considered landlord-friendly for many reasons: You don’t have to obtain a license to become one, there are no limits on late rent fees, you don’t have to provide notice before entering the property. We recommend brushing up on your rights as a landlord in Boston so you have more power when it comes to negotiating with your tenants.

Whatever path you take, having a plan for selling your home (with or without your tenants in residence) will help you approach the sale more confidently.