Selling Rental Property

For Sale by Owner

When I was a Realtor, ^® I used to dread selling rental property. Before proceeding, I first wanted to meet and talk to the tenants.

Even after that "meet and greet," my anxiety was at a very high level. The tenants might be all sweet and loveable when I first met them and then turn into ogres later.

Lets give those charming tenants a break first before proceeding OK?

You decide you want to sell YOUR house, so it's none of the tenant's concern anyway. Right? hmmmm.

Bob and Mary have been living in their lovely rental home for perhaps 4 years.


They feel it's their home and have even painted, planted, decorated, mowed, raked leaves, hung expensive custom draperies and curtains.

They've had parties and barbeques. Their youngest daughter Amy, was born during the time they lived there and they loved the way they fixed up the children's bedrooms.

Then it happens. Out of the blue, you announce to Bob and Mary, "We are going to retire and are in the process of selling rental property that we own."

BAM! Never seen that one coming!

Yes it can hurt, when you tell your long time tenants they may have to move.

What's that? You are going to sell the house as a rental property? Don't be so sure. What happens when you get an offer that states the tenants are to be out by closing day?

I'm of course talking about single family dwellings or a duplex here, not apartment buildings.

First, I would suggest that you don't just leave a note in the mail box that you are selling. Go talk to the tenant in person.

• Explain your situation and ask if there is anything you can do, to make their move less disruptive.
• Explain about what notices they will receive before showings
• Explain what hours you will limit showings and/or days of the week.
• Ask them about their concerns.
• Offer the tenants first option to buy the property. More on this later.

In other words, show some compassion and understanding.

When you are selling rental property, there are certain rules that must be followed. I can only give you some examples, as these rules will vary, depending where the property is located. So, here are some examples.

• Tenant(s) must be given 12 or 24 hour written notice of a potential buyer showing.
• Tenant(s) must be given 60 or 90 days notice to vacant, or to complete lease, or be paid a certain compensation etc. etc.
• Showings are only allowed between 8am and 8pm might be a rule.
• You may not ask the tenant(s) to leave for a showing if they don't wish to comply and insist on being present.
• If listed with a Realtor, ^® you can't have a lockbox and/or a key to the house.

In my real estate carreer I have seen all of the following:

The Good: On occassion, there are tenants that are just wonderful. They allow you to show the house on short notice.

They leave when a potential buyer is expected to view the property. They may even make sure the place is clean, neat and inviting when there is a showing.

If you have such a tenant, count your blessings! Make sure you do something special for them when the property sells. I mean that. You are truly blessed.

The Bad: These tenants insist on their rights. You better give them that 24 hour written notice and don't show up 5 minutes early!

They are surely not going to clean the house before a showing and heaven forbid that they go outside for a walk while people are viewing the property.

They will also may sit in front of the blaring TV or cook cabbage soup during the showing.

The Just Plain Nasty: Oh Boy! These are real fun tenants when it comes to selling rental property. These people not only do the above, they take things to the next level. Here are some things I've experienced:

• Dog poop on the floors
• Dirty dishes piled in the sink and on the counters
• Arrive at the proper time after proper notice, and people are gone. (Many, many times this happened.)

• Tenants stay home and bad mouth the property and on occasion, just make up lies to try and discourage any buyer from putting in an offer.

• Tenants sitting at the kitchen table drinking alcholic beverages, cursing and chain smoking
• When you are viewing the property, there are crack pipes, needles, and burnt knifes and spoons left out in plain sight.

Yep, things can get pretty interesting when selling rental property!

Here are a list of ideas, should you be selling rental property.

• Give the tenants notice and sell the property after they have left. You may have to offer an incentive, if you want them out early.
• If you have super nice cooperating tenants, you may be able to pull everything off with the tenants still there. Don't forget to reward them please!
• Hmmm? Nope that's about it.

Don't forget to ask the present tenant if they wish to buy the property from you. You might even offer them a discounted price. Why?

• They might just buy the property!
• It doesn't get any easier. Sit down, fill out the offer to purchase, sign, take to your respective lawyers, fulfill the contract, close and collect cash.
• No advertising, no commission, no webpages, no feature sheets, no showings, no open houses, more money on transaction

Yep, I think you could offer a bit off the price for those nice tenants. A little carrot on the end of a stick, shall we say? You get the picture.

If you need contract forms for the offer, I have provided a link below to obtain proper forms for various countries.

You should always have blank contracts on hand regardless, when selling for sale by owner. Don't get caught off guard!

You can find out where to get these forms from: Real Estate Forms

While I'm at it, don't forget to advertise when selling rental property online. You can find my recommendations at: For Sale by Owner Websites.

Depending where you live when selling rental property, there is more than likely some tax implications, before and after you sell. I have added the following links for the U.S.A. and Canada for your convenience.

Selling Rental Property U.S.A.

Selling Rental Property Canada.

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