Hi everyone! I am currently entertaining the idea of selling my duplex here in Cincinnati but both of the tenants are M2M. They both just converted and needed the flexibility which was no problem for me.
However, I don’t know how to inform them of the situation and I certainly don’t want them to get a 30 day notice from a new owner as they are great long term tenants who I really respect.
Should I sign them to short term leases to protect them or should I just give them as long a runway as possible?
If you know you are going to sell, do them the courtesy so they can prepare just in case. I would then go to the buyer and see if they prefer to have them short term or not. If they would like the cushion of a short lease, I would then present to the tenants to see if they are interested.
@Bryan Eltzroth , you may be over thinking this. Whether I let my tenants know about selling would depend if I was going to openly market the property with a sign and showing prior to getting a signed contract. Some investors will market their property without a sign and not show until they have signed contract in hand. If that is what you are planning on doing there is no need to inform your tenants. Nothing changes for them in the event of a sell.
If you are going to show the property then you have to understand the potential consequences. My lease says I can show the property during the lease as long as I give pre-notice (24 hours) for example. If I have a tenant who is on a lease term they can't break the lease without consequences. However, if they are month to month they could give notice right away especially if they don't like having to show the unit while living there.
If you have a strong market in Cincinnati then you may not want to openly advertise. But if not, generally you will get a better price by showing prior to requiring a contract. Good luck, and Cheers!
You’ll most likely need something in writing as a lease for the new buyer if they’re doing conventional financing. So at minimum you’ll want something written up.
If you don’t think the tenants will panic-leave I would just tell them what is going on and explain that you want to give them protection in the event the new owner wants them to move out so tell them you’re going to have a month to month lease where the owner just give 3 months notice before requiring the tenant to vacate whereas the tenant can leave upon 30 days notice.
I would do this earlier than later because if you’re already in contract sometimes the contract states to not enter into new leases.
Most buyers are ok with M2M tenants in place.
Thanks for the tips gentlemen! I appreciate the advice. I will work with my tenants to help protect them and I think the month to month with a 90 day landlord vacate policy would work well for both of them in this case.
I will certainly circle back once we’re farther along in this process!