There are plenty of reasons to sell a house, and there are even more reasons if you own a rental. Sometimes, it’s more economical to sell a house than it is to renovate it for a new round of renters. Other times, selling is the only way to maximize tax benefits. In other cases, people get tired of managing properties and are ready to cash out.
Regardless of the motivation, if you’re ready to sell a property that currently has a tenant, you have some serious options to weigh. In general, there are three paths forward. You can sell directly to the tenant, arrange a sale that keeps them as renters, or end the lease and move on with the sale. Each path has merits, and you should understand all three before you make any major moves.
Sell Directly to the Tenant
This is certainly the easiest solution, when it is viable. If you sell to your tenant, it’s a regular home sale. Go through the normal paperwork and process, and you can even skip listing with a real estate agent (although you do want professional title work at a minimum). You don’t have to worry about what happens to the tenant when the sale is complete. While you do have to ensure that the lease is legally satisfied, a tenant will usually be happy to terminate a lease early if it means buying a house. This has the potential to be a low-stress process.
The problem is one of viability. In most cases, if your tenant could afford to buy a house, they would. So selling to a tenant is a challenge of timing more than anything else. But it never hurts to float the idea if you are open to the concept.
Keep Them in the Property
If the tenant isn’t going to buy the property, then that leaves you with a tricky situation. Either the new owner is going to continue renting to them, or they have to leave. Let’s look at the former option first.
It’s entirely possible to sell a house without ending the lease or evicting the tenant. In order to do this, you’ll need to sell to someone interested in renting the property. When you find such a buyer, having a good tenant in place is a selling point. The new owner will likely understand the value. They won’t have to do immediate major remodels in order to make the place rentable. They can also skip downtime when they buy the property. It will generate revenue immediately.
If a tenant is staying in a sold property, it’s important to be diligent about the paperwork. They need a new lease or contract to be in place before the house fully closes. This is the best way to protect everyone’s rights and avoid unintended legal messiness.
The challenge in this case is finding a property investor to buy the property. Then again, when you know where to look, that gets a lot easier. We Buy Houses Colorado Springs and similar investors are always looking for new properties and often pay cash. These are the types of minds that understand just how to perform this transition and why it’s good for their business.
End the Lease
There are plenty of scenarios where the tenant can’t or won’t stay in the property after it sells. When this is the case, one of the most important things is to review the lease agreement. If the lease extends past your hopeful sale date, then you’re in a tricky situation. You can look into a cash for keys agreement where you compensate them for breaking the lease early. As long as they agree, and there is a legal contract behind the agreement, it works. These kinds of agreements are more common than you might realize, so there’s a method you can follow.
If the lease isn’t in the way, then as long as you give the tenant proper notification, you can let them know that you won’t be able to renew the lease and that you are selling the property. As long as you protect their rights as a Colorado renter, there are no problems, and you can sell the house.
If you want to more carefully consider any of these ideas, contact We Buy Houses Colorado Springs. We’ll discuss what it takes to sell your Colorado Springs house, and we’ll even give you a written cash offer to help you weigh every course of action.