I have a property I am interested in selling which has a tenant in place who is current on the rent and has lived in the property for a couple years. The tenant has no idea I am considering selling the property and I would like to keep it that way so I do not wish to list on the MLS. The property is under management and the property manager knows I am interested in selling but does not seem to have landlords looking to expand in that neighborhood. (It is a solid suburban location.) I don't want a lot of people driving by and do not wish to allow access to the property until I have a buyer who I am able to qualify.
How would you market such a property?
Option 1: Target owner occupant buyers. Terminate the lease and get the property in move-in ready condition. List on MLS as usual.
Option 2: Target investors. Keep tenant in place, list property with a local broker as a "pocket listing" - IE, not on MLS. If the broker has access to a large group of investors and the property is priced correctly they should be able to find a buyer. You could stipulate that the Buyer can inspect the property with an accepted contract.
It is very difficult to market a property to a broad audience (IE on MLS) with a tenant in place. Tenants have little incentive for the property to sell and buyers won't see the property in the best possible light.
@Nate Garrett , thanks for your response. It seems I didn't give enough information. This property is quite profitable for me. I am interested in selling it to put funds toward other projects but if I do not find a buyer who would like it with the tenant I am content to hold it. I do not want to disturb the tenant because I would be happy if he renewed his lease in the event I do not find a buyer.
My understanding is that MLS agreements prohibited brokers from taking pocket listings. Is that not true in every area?
Why not sell or lease option to the tenant and carry the note?
Have you considered selling it here?
I sell properties on this site all the time.
@Marcus Brown , I would be very surprised if the tenant would qualify for a mortgage and I wouldn't part with this property without a significant amount (~$25K) up front. Also, I wouldn't want to step in and manage this property again as the property manager has been doing a good job.
@James Wise , I hadn't considered selling it here. I would be reluctant to post the address to keep traffic to a minimum. I would want to, at least, screen potential buyers and maybe require proof of funds before giving the address. I would probably need a contract before giving interior access. Is that workable on a public site like this?
As a buyer I have done pocket listings with my realtors in two different states. Never heard it was illegal as long as full disclosure to seller was provided.
Personally I would create a proforma. Include the "area" but not the house. This way people have a "very" good idea of the house without you disclosing areas.
great 3 bed 2 bath house located in river tree community of X city
Purchase Price- X
Showings with serious buyers only (serious defined as signed contract and ernest money provided)
I would also send it to all the top agents in the area. Again you don't want them to be able to "point to your house" so no "blue" trim but specific enough that they get a good idea.
@Elizabeth Colegrove A local agent lists all of her pocket listing pro formas that way, but to help people narrow down neighborhood (which can often times have fuzzy delineations) she will say "Within 3 blocks of X St and Y Ave". Too vague to figure out which property, as there's 150+, but not too squishy where you're wondering if the property is in the good area of the neighborhood, at the edge, close to transport, etc.
For SFH rentals we would offer the property to the tenant to buy and help them get qualified by a mortgage lender.
Secondly, if they are not interested, then we would get the property vacant, if timing is an issue, we might even off them some money to move. Spruce up the place and put it on the market to sell.
I've bought and sold 800+ properties (see BP Podcast #82), and of all the SFH rentals that sold, all were vacant, except for the ones sold to existing tenants. And all sold, except for one to owner occupants, not landlords.
I've found that owner occupants will pay more because they are not looking at the rent potential and income generated.
But in the case of apartments that I've sold, they are going to landlords/investors, and they want to see the building filled with paying tenants, vacant units are a red flag.
And of all the properties multi-units that I've sold the only owner occupant buyers were people who were reconverting 2-3 units back to a SFH.
So SFH rental sales is the total opposite of multi-family sales in my experience.
Originally posted by @Jeff Rabinowitz:
@James Wise, I hadn't considered selling it here. I would be reluctant to post the address to keep traffic to a minimum. I would want to, at least, screen potential buyers and maybe require proof of funds before giving the address. I would probably need a contract before giving interior access. Is that workable on a public site like this?
With anything, how good of a deal it is will dictate how many loops a potential buyer will jump through.
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