Investor · Scottsdale, AZ · Member since 2017 · 9 posts · 0 votes
Hey BP,
I am looking to sell my property that is currently occupied by a tenant. He is a great guy, a single Dad, never been late on payments and has been very understanding about some not so great property management issues in the past. So I want to be sure he isn't put into a difficult position. When I approach him about selling the place I would like to have some sort of document for him to sign saying that he agrees to the terms of moving out and breaking his lease. I have been told that in cases like these incentifying the tenant with sums of money if they are able to move out by certain dates is a good way to go.
My question here is does anyone have any legal type documentation along these lines? (I have looked through the BP files, Problem is I dont really know what i'm looking for).
Lastly, Any strategies on how to approach this will be very appreciated.
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
9y
You have no leg to stand on as far as being harsh if the place is trashed - because you just signed a new lease with this guy.
So, picture ending up in court and the judge asking you why you signed a new lease with some guy who trashed your house?
You need to put yourself in the shoes of this guy. If you were him, what would be the proper incentive to get you to move. Forget completely your own needs or agenda. Pretend you are the tenant.
If he's a single dad, I'm assuming that means schools and kids. Does he have custody? Moving at the beginning of the school year will cause stress for him and the kids - even if they don't change schools. They'll be dealing with new rooms and new transportation problems. This is a huge deal for a single parent and their kids.
So, if I was him, would I move for $200? Heck no. And if you tried to pull some strong-arm routine on me, I'd be googling my rights and maybe talking to a lawyer.
So, now, if you were that guy, what would you want in order to want to put yourself and your kids through all the hassle? And maybe there's an issue with him and the court as far as not changing addresses, too.
I think you should sit down with the guy and tell him what you'd like - that you're going through a divorce, etc., (which he's probably been through) and you are going to need to sell the house. So, what would it take for him to move out?
And heck, maybe he'll want to buy it. But, treat him with respect and ask him what he'd want. You may be surprised, and it may be easier than you expected.
But, if you go in their with some wimpy, insulting offer, then pull some threatening type behavior, it will not likely go easy for you. Remember, you are the one who needs a favor here. Treat him with respect and he may surprise you.
Alhambra, CA · Member since 2015 · 142 posts · 78 votes
9y
Why not start small and offer to pay for moving and give him the entire deposit back no questions asked? No need to talk about large sums of cash unnecessarily.
How much notice has he received and what kind of lease was he on?
Investor · Scottsdale, AZ · Member since 2017 · 9 posts · 0 votes
9y
I will be meeting with him on Sunday to talk about what is going on. His rent is currently $1260 and his new lease for 9 months will be starting on the 1st of August. So I was thinking maybe offer something like:
Out by August 1st $500
August 15th $250
Maybe that is too much?
Part of the reason I will be meeting with him on Sunday is to actually get in the property as well to see it and make sure nothing is wrong and he isnt one of those guys that sounds amazing on the phone and on paper but is actually taking walls down... Once I am in the property I will make that determination of wether or not I want to offer his deposit back.
I honestly think he will react better to just getting some money rather than paying for moving. I can throw that in there to another option for him though.
Investor · Scottsdale, AZ · Member since 2017 · 9 posts · 0 votes
9y
Because we just signed a new lease a couple months ago. The wife and I have had some life changes and are looking to move out of State. It has put us in a bit of a bind.
Real Estate Agent · Newport Beach, CA · Member since 2017 · 259 posts · 293 votes
9y
Best thing is to guarantee the entire security deposit back if he moves out by date x. For every day he waits, decrease the security deposit return by something like 10%/$10 whichever you prefer. If you make each day matter, you're more likely to create the frenzy that causes him to move sooner rather than later. Providing a gap will allow him to take a break and put it off as opposed to focussing on your goal of incentivizing him to move sooner rather than later.
Is the house in the hood? If not, offering him $250-350 is an insult. If he wanted to break the lease I assume there's a penalty. Why should you be allowed to break the lease and pay pocket change? What does your moving have to do with selling the house? Why not keep it, If he's a good tenant, the house is a good house and it cash flows?
Investor · Scottsdale, AZ · Member since 2017 · 9 posts · 0 votes
9y
Thank you all for the information. I will be looking into the tenant early termination fee to see how much that is. I think I have all my options together. I will approach the meeting a little more like a negotiation, starting low and working our way up. I don't want to be insulting to him so I believe that at least paying moving fees is reasonable.
I signed a lease as well and it was my life's changes that is effecting this. I normally know enough and far enough ahead that this situation doesn't arise.
All this said if my property is trashed I will go hardcore on him. If it's not then he has been a great tenant and made me a lot of money.
The rental used to make good money, but expenses in the last two years have gone through the roof. HOA went up 20% one year then 10% the next. Been having issues with the AC unit (seems that people are sabotaging it) and the appliances are about 9 years old. All that has added up to me just not wanting this property under my belt anymore.
Real Estate Investor · Colorado Springs, CO · Member since 2009 · 40 posts · 24 votes
9y
It sounds like you are on the right track, but I'll add a few more things to think about. At least in Colorado, you are legally bound to honor the lease. It is your tenants choice to release you from this legal contract regardless of your life circumstances. Suggesting to reduce his security deposit in any way just to encourage him to move out would be illegal. Treat him the way you would like to be treated. Finding a new home and moving is not a trivial task for him.
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
9y
You have no leg to stand on as far as being harsh if the place is trashed - because you just signed a new lease with this guy.
So, picture ending up in court and the judge asking you why you signed a new lease with some guy who trashed your house?
You need to put yourself in the shoes of this guy. If you were him, what would be the proper incentive to get you to move. Forget completely your own needs or agenda. Pretend you are the tenant.
If he's a single dad, I'm assuming that means schools and kids. Does he have custody? Moving at the beginning of the school year will cause stress for him and the kids - even if they don't change schools. They'll be dealing with new rooms and new transportation problems. This is a huge deal for a single parent and their kids.
So, if I was him, would I move for $200? Heck no. And if you tried to pull some strong-arm routine on me, I'd be googling my rights and maybe talking to a lawyer.
So, now, if you were that guy, what would you want in order to want to put yourself and your kids through all the hassle? And maybe there's an issue with him and the court as far as not changing addresses, too.
I think you should sit down with the guy and tell him what you'd like - that you're going through a divorce, etc., (which he's probably been through) and you are going to need to sell the house. So, what would it take for him to move out?
And heck, maybe he'll want to buy it. But, treat him with respect and ask him what he'd want. You may be surprised, and it may be easier than you expected.
But, if you go in their with some wimpy, insulting offer, then pull some threatening type behavior, it will not likely go easy for you. Remember, you are the one who needs a favor here. Treat him with respect and he may surprise you.
Real Estate Agent · Westford, MA · Member since 2016 · 92 posts · 52 votes
9y
You want him to move on a weeks notice, after he thought he had a 9 month lease starting August 1? That's pretty brutal. Does your area typically require rentals be delivered vacant or is this property likely going to be bought by a homeowner?
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
9y
In the Denver market, asking anybody to change housing in that short of notice is a HUGE imposition. The rental market is way too tight for that kind of flexibility and you'll need to either come out a huge sum of money or wait out the lease. If the tenant is smart, he'd tell you thanks but no thanks and he'll move out at lease end. $1260 for anything but the crappiest place is practically a steal in this market and he's unlikely to find anything decent for that price or lower.
You have other options.
Manage the property for 9 months from wherever you're moving to.
Sell the place to another investor - if the tenant is great, most investors would love to have a turnkey situation.
Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
9y
Frankly, if I were your tenant I'd not sign any such document and would, instead, point out that you and I have already have a legal document (the lease) and that I'm planning on remaining right where I am until it would normally expire.
This is especially true in light of what you are offering money wise.
Many landlords sell properties with tenants in place. That's not unusual. The lease would simply "roll over" to the new owner and it would be up to them to either continue with the lease or consider a "cash for keys" deal with the current tenant.
If you do decide to go the "cash for keys" route with your current tenant you need to offer him a whole heck of a lot more (and more time to move) than what you've posted here.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
9y
@Justin German in reality, you are in a tough place. You are literally at the tenant's mercy for the next 9 months. You have a lease. You can't make him move. Sure you can maybe make things miserable but that comes back on you. I completely agree with @Linda Weygant about the tenant's position. Your price is a good deal for them and it was a good deal for you but now not so much. Personally, I think you have at least $10k at play here. The price you would get selling with the tenant in place vs selling vacant and spiffy. Perhaps you would find an investor who will pay full retail with a tenant in place at below market rent. That is probably not likely but it's sure you won't be able to sell to an owner occupant. Realistically the tenant would be out about $5k when you consider moving costs, and the amount of added rent they would need to pay in the next 9 months. That has no consideration for all the stress and brain damage of finding a new place and moving. Right now folks are looking for Sept 1 move dates to give you some perspective on the market.
I'm with @Account Closed on this. It's nearing the end of summer and if he's a single dad, he probably has kids that will going back to school in a few weeks. I was a single dad for a while and I know that the #1 factor in where I lived was a good school zone as well as proximity to my ex (shared custody). Getting all those things to align is not an easy feat and you're timing is pretty poor.
The fact is the tenant is on firm legal standing here. He has a signed lease for the next 9 months. You legally can't make him move out. And offering him $500 would probably just insult him. But as Sue suggested, if you approach him respectfully, explain your situation, he may be willing to work with you. But I would definitely advise against trying to "strong arm" him.
Investor · Arvada, CO · Member since 2017 · 109 posts · 112 votes
9y
Try to sell the house to an investor with the property already rented to a great tenant. Unless you are severely under charging for rent could be good opportunity.
Investor · Front Royal, VA · Member since 2013 · 586 posts · 418 votes
9y
@Justin German I might have missed something, but why can't you sell the property with him in place? The legal document he will sign is called an estopple agreement and the new owner signs it as well basically saying he acknowledges that there has been a sale and the new owner agrees to uphold his lease.
Investor · La Jolla, CA · Member since 2016 · 66 posts · 169 votes
9y
Lol this is a troll thread, right?
"Hey [tenant], I know you've been a model tenant and we told you we were about to sign a new 9 month lease with you, but now I changed my mind and I want you to GTFO in a couple of weeks... don't worry though I'll give you a couple hundred bucks. That'll definitely make it easier for you in one of the tightest rental markets in the country!"
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
9y
Another reason that I think a lease sucks.... it protects the tenant WAY more than the landlord. If the tenant breaks it, good luck getting a judgment from them....if you win, you never see the $$. If you break it, the courts will almost always side with the tenant. Basically you pay him big $$ now or in court...or you ride it out until the lease is done.
Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
9y
I would hate to know what would happen if the tenant was not a nice guy and missed a few payments. Perhaps set the house on fire "accidentally" so you can collect the insurance money, lol. Seriously, asking a tenant with kids to move on a moments notice when they just signed a lease is a horrible favor for being a good, understanding tenant. I do not want my tenants passing on their life problems to me. In return, I try to never pass my life problems on to my tenants. Sometimes we have to honor our word (written word in this case), even when it hurts us. I hope it all works out for the best.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
See if the guy (current tenant) wants to and is able to buy the property. If he is, cut him a good deal and save on some RE commissions. If not, then at least you tried to create a solution allowing him to stay.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
So your life changes are simply that managing the property is more expensive than you want it to be and you just figured this out in the last two months? I'd tell the guy you plan to sell the property at the end of the lease term, in nine months. Give him the respect he deserves and honor your lease. Then you don't have to pay him anything- you shake hands and walk away.
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
Moral of story here is month to month leases give the landlord the much needed power to adjust the property for rent increases and lease non-renewal.
This renter's lease is valid, can be transferred to new owner, you can ask him and negoiate a lease buyout,, would be in his favor. So get your pocketbook out.. I would see no less than 3 months rent with full deposit back condition AS IS for him to be able to agree to vacate in 30 days or less but basically he doens't and probably won't agree to move.
Only other way would be if he violated his lease, and you could then legally file for cause. But like you said he's a good guy.
Sale of house with current renter is tough your market is less because someone would only consider it if they don't want to live there and only want the property as an investment rental.
The balls in his court, feel him out and see what he may agree to and PRAY