Selling a House with Tenants
Selling a rental property with existing tenants adds complexity but is entirely manageable with proper planning. Understanding tenant rights, lease implications, and buyer perspectives is key to a smooth sale.
Tenant Rights by Lease Type
Key Principle
Lease Survives Sale
in most states, existing leases remain valid after the property is sold
Fixed-Term Lease
The new owner must honor the existing lease through its expiration date. The tenant cannot be removed simply because the property was sold.
Month-to-Month Lease
Most states require 30-60 days notice to terminate a month-to-month tenancy. Check your state's specific requirements.
Selling Strategies
- Sell to an investor: Market the property as a turnkey rental with income
- Wait for lease expiration: Sell vacant for the highest price
- Offer cash for keys: Pay the tenant to vacate early
- Sell with tenant in place: Some buyers prefer immediate rental income
Impact on Sale Price
Occupied properties typically sell for 5-10% less than vacant properties when marketed to owner-occupants. However, when marketed to investors, a reliable tenant with a below-market lease can actually increase value.
The Bottom Line
The best strategy depends on your timeline, tenant situation, and target buyer. Vacant homes sell for more to owner-occupants, but occupied homes with good tenants attract investors. Plan your approach based on your specific situation.