sell a property with a tenant before the lease expires

Member since 2022 · 47 posts · 18 votes

I have a house in chicago that I want to sell but it has tenants inside and a lease that ends in October. can i sell the house before lease ends or can i give my tenant a 30 day notice so she can leave and ill sell the house. Does anyone here have experience with that or been through something similar, if so can you please tell me what to do in this case. I appreciate your comments

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Joe FunariBusiness Member

Real Estate Agent · Keller, TX · Member since 2017 · 850 posts · 825 votes

@Christina Venegas I would recommend offering the current tenants a free months rent to vacate the property in 30 days. Then do the make ready and market the property for sale. The reason is why would you only market your property for sale to just other investors. We are notorious for not paying fair market value for investment properties. Also, most investors don't like to purchase tenant occupied properties. Because many investors don't vet tenants properly. In short, don't want to assume another investors baggage. So I recommend you get the tenants out of the property. Then market the vacant property to not only other investors but owner occupants too. This exponentially expands your potential buyer pool. Don't short change yourself.

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
Not a big deal unless the tenant is not paying. Investors buy properties with tenants all the time! I know I have and I prefer a property with a paying tenant.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Christina Venegas:

1. Existing contracts transfer with the sale of the home. A buyer may want to keep the renters for immediate income.
2. If your tenants are bad, they can scare away buyers. If they don't maintain the home or if they are late on rent, buyers may not want to take on the risk.
3. Occupied properties are often harder to sell. It takes more coordination to set up showings, Tenants may purposefully make it difficult or try to sabotage the sale, or maybe they don't keep a clean home.
It can be done, but my preference is to sell single-family homes vacant.
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
It depends on how you want to market the property, you can sell the house with tenants in place. You will eliminate retail and first time home buyers by selling with tenants, you will attract investors.
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Laura Stayton
Property Manager · DE · Member since 2023 · 248 posts · 133 votes
3y
Unless you're selling off market to an investor I always think it's best to wait until tenant vacates and home can be prepped (painting, flooring...whatever is needed)
Otherwise it's more difficult to show tenant occupied homes (they have no incentive to cooperate) and home generally is not market ready and won't show as well.
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Michael K.
Investor · Chicago, IL · Member since 2018 · 352 posts · 176 votes
3y
Quote from @Christina Venegas:

I have a house in chicago that I want to sell but it has tenants inside and a lease that ends in October. can i sell the house before lease ends or can i give my tenant a 30 day notice so she can leave and ill sell the house. Does anyone here have experience with that or been through something similar, if so can you please tell me what to do in this case. I appreciate your comments

It's not an issue unless #1 the buyer wants to owner occupy and needs to move in immediately or #2 if your tenants are extremely messy or make it very hard to schedule showings. Generally speaking, I think it's better to not have a tenant in place when trying to sell, except when the property is a multi-unit investment property and the rents are already at the market or, in the case of a single-family home, if your tenant keeps the place immaculate and has beautiful furniture (which will save you the staging fees). Good luck!
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Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
3y
Quote from @Christina Venegas:

I have a house in chicago that I want to sell but it has tenants inside and a lease that ends in October. can i sell the house before lease ends or can i give my tenant a 30 day notice so she can leave and ill sell the house. Does anyone here have experience with that or been through something similar, if so can you please tell me what to do in this case. I appreciate your comments

Yes, you can sell the house before the lease ends and the tenant still occupies the unit. Some people like inheriting tenants and other people prefer to buy vacant properties.
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Joe FunariBusiness Member
Real Estate Agent · Keller, TX · Member since 2017 · 850 posts · 825 votes
3y

@Christina Venegas I would recommend offering the current tenants a free months rent to vacate the property in 30 days. Then do the make ready and market the property for sale. The reason is why would you only market your property for sale to just other investors. We are notorious for not paying fair market value for investment properties. Also, most investors don't like to purchase tenant occupied properties. Because many investors don't vet tenants properly. In short, don't want to assume another investors baggage. So I recommend you get the tenants out of the property. Then market the vacant property to not only other investors but owner occupants too. This exponentially expands your potential buyer pool. Don't short change yourself.
1 Reply
Bernard Joseph S.
Investor · NJ · Member since 2022 · 154 posts · 223 votes
3y
I like to sell vacant and buy vacant. Personal preference, but I want to control the situation on both ends. As others have mentioned, showing a property for sale with difficult tenants is not conducive to a quick transaction. Likewise, I don't want to take on someone else's problems. It's just so much easier this way.
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Christina Venegas
OP
Member since 2022 · 47 posts · 18 votes
3y
Quote from @Bjorn Ahlblad:

Not a big deal unless the tenant is not paying. Investors buy properties with tenants all the time! I know I have and I prefer a property with a paying tenant.

what are the reasons why an investor who buys properties with a tenant would not buy it
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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,

Investors might not want to buy (or at least pay for) someone else's problems, whether that is significantly under market rent due to condition; or because a long term tenant has not had regular increases; or perhaps they just plan on renovating and either re-selling or getting a new quality tenant at top of market rent. You are likely leaving a lot of money on the table by selling it occupied, unless it is a C or D property. Even at that, vacant, fresh, and spotless will generally bring a better sale price.
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Justine Veal
Investor · Atl, GA · Member since 2021 · 61 posts · 39 votes
3y
You can sell the house either way. Are they paying tenants? You said you were in California but your property is in Chicago. Have you been self-managing? Do you know the current condition of the home? When was the last time your property was updated? I think if you are transparent about the condition of the property and how much it cash flows you shouldn't have too much trouble selling the property to an investor.
I would honestly at least attempt to give cash for key so I could sell the property vacant. Selling a SF property vacant is not only a lot less of a headache but you'll probably get more $$$ for it. Do you have an agent? I can connect you with an amazing team of investor agents with an impressive network and decades under their belt who would be happy to help you sell your home. Private message me if you're interested. Good luck Christina! I hope this helps!
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Christina Venegas
OP
Member since 2022 · 47 posts · 18 votes
3y

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Ran Iarovich
Real Estate Agent · WA · Member since 2021 · 254 posts · 173 votes
3y
I'm having this same issue. I would say that you would need to really understand the lease payments and mortgage so that you know how if you'd lose money in that deadtime period. Also make sure that you understand the motivation of the tenants so that you don't get screwed over by either having them squat the house or wrecking the place. Hope this helps!
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