Want to sell property that still has tenants

6 Replies

I am at the stage that i want to sell the investment property that I bought as my first one a few years ago.  I am feeling pretty sentimental about it, but the problem that I have is that I still have tenants in there.  I've looked at many occupied properties before from a buyer's perspective, but this is the first time I am selling one myself and am looking for a little guidance as to how to proceed delicately as the tenants are pretty loyal to me as a landlord and I am assuming aren't going to take news of the potential sale well due to the uncertainty of a new landlord and whether or not they will continue to honor the existing lease.

They currently have about 5 months left on their existing lease and although I would love to wait until their lease is up before selling, at the same time I don't want to sell the place in the late fall/early winter.  

Any advice (or additional qualifying questions) appreciated.  Thanks in advance!

Relationships are what they are...  you are an investor and obviously they're good and loyal tenants-- do you have any other units nearby you're willing to offer to move them into? 

If not, then I would say-- gently, but I would say it anyway, that the asset is a vehicle for investment purposes.  --and who knows? The new owner may be even more awesome that you (as hard as that is to believe...)   It's your property-- do what you must.  Without apology.  

Originally posted by @Steve McGovern :

Relationships are what they are...  you are an investor and obviously they're good and loyal tenants-- do you have any other units nearby you're willing to offer to move them into? 

If not, then I would say-- gently, but I would say it anyway, that the asset is a vehicle for investment purposes.  --and who knows? The new owner may be even more awesome that you (as hard as that is to believe...)   It's your property-- do what you must.  Without apology.  

I wish I did have another unit for them that is in their price range.  Truth be told, this particular unit is pretty far from where I live and I want to focus on properties closer to home.  The fact that I can walk away with $55k from my first property doesn't hurt either.

You are right and what you said has gone through my head before.  I just want to make sure I am handling the situation in the most appropriate way with respect to how I present it to them.  At the end of the day, I am not apologetic about it, but I don't want them to feel as if it is personal, because it isn't. 

There is no clause in your lease that says a new owner will have to honor current leases?

@Michael Noto , no clause needed, at least in most jurisdictions. It's the law.

I'm handling this situation right now for a property that I manage. I've found it's most important to be empathetic when relaying the news to the tenants. 

Let them know what the sale process will look like so there are no surprises. (The property will only be shown by licensed agents, we'll have 24 hours notice for all the showings so you won't have any surprises, The new owner will have to follow the lease you're currently in etc. etc.)

In my experience setting the right expectations is very helpful, as most of the time tenants are afraid of the unknown. 

It probably wouldn't hurt to add in something like "You guys have been great as tenants, and I'll be sorry to part ways with you. If you have any concerns as we're going through the process don't hesitate to let me know, I want to make sure the process is as smooth as possible for you. If you should decide to move out when your lease is up, I'd be happy to recommend you and act as a reference for any other apartments/houses you're interested in."

ask them if they want to buy it land contract. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here