selling rental property

Tips on Selling a Rental Property with a Bad Tenant

Being a landlord to a bad tenant can be nightmarish. Many TV programs depict the many problems that landlords are subjected to including abusive behavior, criminal damage, and antisocial behavior. Rent issues top the list of problems landlords face.

Bad tenancy is a common occurrence in the United States.

If you are a landlord, you are aware of how stressful it can be to deal with a bad tenant. You might be considering selling off the rental property and forget about the landlord business. When it comes to selling the property, it is no longer just about you.

Remember that the tenant has rights and the process might not be easy. Strict laws govern the sale of a property with renters in residence. It is imperative that you understand what the law says about you and the tenant before you proceed.

These few tips on selling a rental property with a nasty tenant will serve as a good starting point for you.

What are Your Options?

When selling a rental property with a bad tenant, there are two options to consider. You may choose to wait for the lease to expire, or you can sell while the tenant is still in the home. Each option has its fair share of up and downsides.

Waiting for the Tenancy to Expire

If you choose to wait for the lease agreement to expire:

  • You will have enough time for updates. You can do cosmetic upgrades to the property, clean it sparkling, and generally spruce it up before the sale. Doing so will help you fetch a better selling price.
  • If you are selling in a hot market, selling with the tenant still in residence might make you miss out on reasonable offers. Depending on the federal regulations and lease agreement, it might be difficult to get the tenant out in time.

The downside of waiting for the lease to expire is that:

  • You will have to deal with the bad tenant longer
  • You will still have mortgage costs to meet if you do not make a sale as soon as the tenant is out. It means going back to your pocket to make the payments. It takes some time to prepare the property for sale, get it listed, accept an offer and close the deal.

Selling With the Tenant In

In this case, the staging process is more natural. With a furnished house, the buyers can picture themselves living in the house, which can help them make a decision faster. If the tenant carefully takes care of the house it looks appealing; it becomes more desirable to the buyer.

Selling a rental property with the tenant still living there saves the buyer the hustle of looking for a tenant. It becomes your strongest selling point.

On the downside, a tenant can make it difficult for you to sell. A disgruntled tenant will make it difficult for you when staging. They may not accommodate the showings, and their unpredictability can have a significant impact on the sale.

Your solution in such a case might be persuading your tenant to cooperate. You can best achieve this by offering them lower rental rates for the period remaining to the lease expiration. You could also offer to reimburse their moving costs in exchange for a well-kept home during the showing.

The Rights of the Tenant

You have to take into consideration the rights of the tenant. Your rights in such a case are few and far between. Selling a property that someone else calls home may require their consent as long as they have paid rent.

It does not matter the kind of tenant you have. Remember that they have a right to quiet enjoyment. It merely means that you cannot exert pressure or harass them to leave. Any coercion from you could earn you a court fine, and the tenant might be given legal permission to remain.

The tenant might decide to vacate your premises upon being notified of the upcoming sale. The uncertainty of the terms in the next lease negotiation may cause them to look for another accommodation. If they wish to move out, you cannot hold them back if these were the terms in the agreement.

The tenant risks being faced with weighty penalties if they walk away from the lease agreement. This is if there was no agreement about premature termination of the lease. Whatever the situation, selling a rental property with tenant still living there can bring a lot of emotions.

Playing open cards with the tenant by keeping communication lines open might be the easiest way to sell the property. They will appreciate that their rights were respected in the whole process.

How to Deal with Uncooperative Clients

Many real estate agents feel that selling a rental property with an uncooperative tenant is almost impossible. The tenant is the person who lives in the house on a daily basis and knows every problem with the house. They also know the neighborhood very well.

It is heart-wrenching to imagine the unfathomable damage they can cause and how easy it is for them to break a deal if they are uncooperative. Agents will also steer clear of the property because they know the danger at the residence.

One option is to decide to wait for their lease to expire, or you can devise mechanisms to make them cooperate.

Give thought to the way you deliver the message. The least you can do is meet them in person and allow them enough time to ask you all the questions they might have.

Offer the tenant a chance to buy. If they love the house, they might be interested in buying it. If they are interested, work out the deal with a real estate agent. Some of the approaches to the transaction are:

  • They keep paying rent but sign a lease-to-own agreement and make a one-off nonrefundable fee. With this option, they should purchase the house within one year.
  • A lease-to-own agreement in which part of the rent payments goes towards a down payment.
  • A seller-finance agreement, in which you will act as the lender and the tenant will make payments over a few years, with one balloon payment. You will benefit from this arrangement from the interest earned on the debt.

This option works only if you as the landlord are clear of any mortgage costs on the property.

Pay the Tenant to Vacate

Paying a tenant to move may sound like it is on the end. However, if their level of uncooperativeness is such that you cannot make a sale, you might have to go this route. The question is in how much to offer.

You could offer to pay an equivalent of the remaining rent amount to the end of the of the lease agreement. Alternatively, you can pay for the moving costs. If this is not enough and the tenant still refuses to move, you can offer to pay the security deposit for the new house.

While this is just a suggestion as to what you can do, it is not a guarantee that the tenant will agree to take the cash offer. They are under no legal obligation to do so.

Sell to House Buying Companies

If you have tried all you can to sell a rental house with a bad tenant with no success, consider selling to a house buying company. Look around your area for companies that buy homes without demand for repair of the damage done by the tenant.

A house buying company can efficiently and professionally deal with any tenant, taking the hustle off your back. They will not only deal with a bad tenant but also make your selling process more relaxed and more convenient. Some of them will pay cash for our house.

The option may not fetch you the best price, but it will considerably reduce the risks you face of having a deal broken by a bad tenant.

Selling a Rental Property – Final Thoughts

Regardless of the type of tenant you have, you have a right to sell your house whenever you want. A bad tenant should not worry you as you have the full rights to your home. It is essential to be careful how you handle them during the process.

Many landlords decide to sell because of the stress of handling a bad tenant. You do not want to make the situation worse for yourself by being too hard on yourself. Sometimes you will need to compromise and accept a price that is a little lower than the market value.

You will not only sell fast but also wash your hands off the nasty tenant and stop them from getting on your nerves.

You also need to seek legal advice at every step of selling a rental property. Ensure that you have verified your tenancy facts and that that the lease agreement does not contradict anything you do. Avoid getting stuck in an ugly court fight with the tenant.

If you want to sell your home, ASAP Cash Home Buyers is here to help. Just reach out to us, and we’ll take you through the process.

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