Tips For Selling a Rental Property During Covid-19
Are you considering selling your rental property during Covid-19? Selling a house with tenants is a bit more challenging during the pandemic.
Whether you are selling for the first time or are a veteran, real estate transactions during Covid-19 have been different.
Rent freezes lost rent, and eviction moratoriums are some of the issues property owners have had to deal with due to the Coronavirus pandemic. That’s why many landlords have been forced to scrutinize their investments to determine whether selling is the better option.
Sitting tenants usually make it more difficult to sell the rental property, given the logistical challenges involved. However, this does not mean it can’t be done. You’ll just have to take into consideration the state and local laws, the lease or rental agreement, as well as the tenant’s rights.
Here are 10 tips to help you sell a rental property with tenants in it during the Covid-19 pandemic.
1. Communicate with Your Tenants
Selling a house with tenants can be easier when there is open communication. Let your tenants know about your plans to sell the property and assure them that they won’t be negatively affected by the sale. In most cases, tenants can remain in the property after the sale.
Being open with your tenants makes things easier for you, especially during viewings, because you’ll need their cooperation for showings to go smoothly.
2. Home Inspection and Valuation
Even if the property is tenanted, you should get an appraisal or CMA as well as a home inspection before listing it. This gives the potential buyers insight into the condition of the property and guides you in setting a price for the property.
Restrictions in some areas due to the Coronavirus outbreak have made physical home inspections and valuations harder, but online valuations can be done. The appraiser or agent will consider the historical value, local area, market condition, and prices of similar properties in the area to give you an approximate property value.
You can use this information to make an informed decision as you wait for restrictions to be lifted.
3. Virtual Viewings
People have been pushed to adapt to changes in their environment with the challenges brought about by the Covid-19 pandemic. A major change in the real estate space is virtual video viewings, which has minimized the need for physical viewings.
Virtual viewings allow you to showcase the property anywhere and at any time. Additionally, tenants will appreciate your commitment to reducing the number of people entering the property, especially with the prevailing Coronavirus pandemic.
Physical viewings can be limited to serious buyers who have already attended a virtual viewing. However, it would be best to remain respectful and courteous when communicating to tenants during the viewings. The potential buyers ought to understand this coordination to avoid uncalled-for problems.
4. Give Tenants 24-Hour Notice Before Showings
A 24-hour notice is sufficient in most cases if you are planning a property showing unless the lease specifies otherwise. It is courteous to consider the tenant’s schedule when planning the showings to suit their needs.
Ensure real estate agents and other listing agents abide by the timing requests for the sake of the tenants. Most tenants are considerate, and they can allow you to show the property on shorter notice as long as you let them know.
Violating the lease agreement will create problems that could have been avoided and make the process more difficult.
5. Help Tenants Find a New Rental Property
Selling a property with sitting tenants has its set of challenges, and if you’d rather avoid that, you can request the tenants to move out prior. However, it will be up to the tenants as long as the lease is still active. Helping them find a new residence will hasten the process should they agree.
If the tenants find the situation unbearable, they may give you a rental termination letter. This is perfectly normal and part of standard renting procedures.
6. Ensure Tenants Don’t Have Overdue Rent
Potential buyers won’t be thrilled about having tenants who are always behind on rent, especially if they will be staying on. Therefore, you should deal with delinquent tenants before listing the property.
If they cannot pay the rent arrears, you could forgive the delinquency if the tenant agrees to move out before the lease term is up. Eviction or court action are the other options if a tenant cannot pay rent– however, this could be difficult during Covid-19 depending on where the property is located.
If your tenants make their payments on time, you should provide rent rolls and up-to-date bank statements to alleviate buyers’ concerns that they are inheriting a tenant that they will need to evict.
7. Emphasize Cleanliness
A messy home is a turn-off for many buyers, hence maintaining a clean property during your home sale. It is your responsibility as the owner to keep the property spotless, especially during showings.
Liaise with the tenants to help maintain high levels of cleanliness during the marketing process. You can also hire professional cleaning services or vendors to spruce up the environment.
8. Offer a Cash Incentive to Vacate
Some tenants will jump at the chance to end their lease early. Paying them to vacate early will be a win-win for everyone. You can pay them enough to cover the security deposit at their new residence or pay their moving expenses.
A speedy exit means a faster listing hence increasing the chance of finding a buyer quickly. Nevertheless, you ought to be careful as offering a cash incentive to tenants can end up being expensive. Weigh your options before settling for a cash-for-keys incentive for the tenants to vacate.
9. Sell to Your Tenant
You may not have to look far to find a buyer for your property if your tenants are ready to be homeowners. Let your tenants know you plan to sell the property first if they may be interested in buying it.
However, don’t necessarily compromise profits for convenience– even if selling to your existing tenants will be beneficial in various ways, it is still worth going through the process if you want to avoid leaving money on the table.
10. Sell To A Local Real Estate Investor
Selling your house on the market with tenants has its own set of challenges, whereas selling your house to an investor (i.e., working with someone who expects these challenges) will make the process much smoother. Selling to an investor will invariably produce a lower profit but will allow for a hassle-free home sale.
Maybe selling your home for cash sounds attractive?
The Covid-19 pandemic has forced many landlords to sell their rental properties even with sitting tenants. Although selling with tenants has its set of challenges, it is still possible.
The key to having a smooth sale while you have tenants in the property is to be considerate and respectful. Also, understand local/state laws about the rights of the tenants. You may have to work a little harder to sell a tenanted property during Covid-19, but it is achievable.
About the author: The above article on how to sell a rental property with tenants during Covid-19 was written by Andy Kolodgie. Andy is an owner of The House Guys in the Washington DC Metro area. As a local real estate investor, he helps homeowners sell their property hassle-free.