Selling rental house-how do I tell the owners?

Question

Hello,

I have a rental property that has a lot of equity in it, and I'm getting almost no return from it. I'm looking to sell it and take that equity and invest it Into a small multifamily(12-16units)

The current tenants have been in the property for two years and have been exceptional tenants(majorly improving the place, always paying on time, not requesting many repairs, etc)

How should I approach them about the subject and what protocols should I follow?

I would love to sell it to them, but I'm not sure they're in a position financially to buy.

Also one of the tenants is a realtor, so I was thinking at worst she'd get the commission for selling it. But also it might make the house more affordable as I could sell it for to cheaper to them as there would be no commissions to be paid?

My mother is also looking to sell her house, and needs a realtor so the tenant could also represent her. Or is it a bad idea to cross mingle affairs?

Any Help with this matter will be greatly appreciated!

Cheers

Barri

Ray Harrell · Answer

I would NOT use a tenant/realtor to sell your place because she would be acting in her own best interest. In fact, they may have some rule against doing that. DO NOT use a tenant/realtor to help you sell other properties.

James C. · Answer

Barri,

First, find out if they want to buy it, then work the deal from there.  If the don't want to or can't, then talk to the agent about the listing.

Make sure that you keep the rental business separate from the sale business.  For example don't do a reduced broker fee in exchange for rent.

Also, do your research,  if the agent is terrible or has a bad reputation, invite them to compete for the listing.  If they are on their game,  then you should be good to go. Have you purchased anything from them? If not why not? If so how did it go? That will tell you alot.

I'm sure some folks will say don't list with your tenant under any circumstances.  IMHO you should vet them as you would any other agent. If they pass, great if not that's the way stuff goes.

As far as your mom's place goes,  the most appropriate thing to do is introduce your tenant to her and let your mom make her own decisions. Obviously this assumes she is capable of doing so.

Hope that helps.

Good luck!

Jim

PS Your title says how do you tell the owners.  I think you meant tenants. Hopefully future owners!