Just because you own a property that currently has tenants living in it, that doesn’t mean you can’t sell it right now. There are plenty of reasons why you might want to sell a rental property or house that currently has someone living in it. You might want to make that investment more liquid. You might want to sell it because it’s not performing as well as you’d hoped. You might have inherited it and don’t actually want to be a landlord. And you might be moving and aren’t interested in having a long-distance relationship with tenants.
Whatever the reason, there are always ways to start the sale process. You don’t have to wait for the leases to expire before you can get going. Let’s dive into how to sell a house with tenants in Memphis.
Selling A House With Tenants In Memphis
Give Notice if Possible
If you are looking to sell a house with tenants who are on a month-to-month lease, this is a fairly easy situation to sort out. Presumably, the lease states that you can give notice to these tenants to vacate the property within 30 days, per Tennessee law. In fact, make sure you consult the Tennessee rental laws to make sure you’re doing everything by the book. You shouldn’t have to provide any kind of reason for the notice since you are doing a “no cause” termination of the lease. You just want to make sure the letter includes specific dates and lets the tenant know they need to remove possessions and leave the keys when vacating. If they do not move out by the agreed-upon date, you should begin the eviction process immediately so as not to delay things further.
Check Lease Terms
If the tenant is currently on a fixed lease with an end date months away, it could be harder to get them to vacate the property beforehand. First, consult the lease agreement, confirm all of the details regarding when it ends, and understand what kind of notice is allowed. Since you’re trying to sell a house quickly, waiting for a long-term lease to end is not ideal.
Meanwhile, check to see if the tenant has violated any of the lease’s terms. If that’s the case, you may be able to terminate the lease with notice much faster. This isn’t an invitation to make up fake violations just to get the tenant out as that can come back on you legally. It’s about identifying legitimate violations such as a failure to pay rent, breaking a no-pet or no-smoking clause, engaging in illegal activities, including false information in the lease, causing any kind of property damage, subletting the residence without permission, or allowing guests to live on property without paying rent.
If you can find a violation that you can back up with Tennessee rental laws, you should submit a notice of violation and let the tenant know when they need to move out. Be mindful that this may take the tenant by surprise and they may have a negative reaction, including refusing to leave. Be prepared for them to call your bluff, so to speak. And if you feel like this might escalate issues and cause delays, it may not be the way to go.
Pay Tenants to Go
If you find yourself with a tenant that isn’t leaving before the end of their lease, you might want to just make them a financial offer in order to buy them out. Sometimes referred to as “cash for keys” tactics, it calls for you, the landlord, to negotiate a fair offer with the tenant that incentivizes them to move out when you’d like them to.
You have a few different options on how to do this. You can offer to pay them the difference between what they have been paying and what they’ll have to pay to move into a new place on short notice. You can offer to pay for their moving costs. You can offer to cover their security deposit or first month’s rent in their new place. If all else fails, you can even just come up with a number that you deem fair and offer to pay them that amount.
The big caveat here is that the tenant is under no obligation to agree to these terms. They already have a legal contract with you, so they have every right to say no to your financial offer. Make sure you remember that if you decide to take a strong stance in these negotiations.
Sell the House to Your Tenant
Depending on the type of property you’re selling, you might already have a buyer right in front of you…the tenant. If you think this might be the case, let them know what you are planning to do and give them a chance to buy it from you outright. They’ll probably need to go get financing, so that could add some time to the transaction.
If it’s an option for you, you can offer to enter into a seller financing agreement with the tenant as well. This allows them to turn their rent into down payments on the property. This option can help speed things up if they won’t have their finances in order for a couple of months. This option only works if you are the sole owner of the property or every owner is in agreement. Also, you’ll need to get approval from your lender to make sure they are okay with a seller-financing sale.
Execute the Early Termination Clause
If your lease includes an early termination clause, you can execute it if you feel like you’re out of options. Not every contract includes this so make sure you check. Depending on the contract, these clauses usually include deadlines ranging from 30 to 90 days. As for how you can justify the early termination, that’s up for debate. It may be crystal clear in the lease or it may be based on what is considered “reasonable.” A property sale would likely fit those criteria.
Sell the Property As-Is
If you find yourself unable to get rid of unwanted tenants or simply don’t want to deal with all of the hassles that come with the process, you can always sell your property as-is to an investor like Fair Cash Deal. They’ll also make you a fair cash offer and can close on the property with you in a matter of days. They can also work with you for an amicable solution for your tenants, even working directly with them to resolve any outstanding issues. Plus, they’re located in Memphis so they understand the market and what your needs might be.