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I have good tenants in a house I want to sell, but the rent they pay is on the low side for our local market. I steadily increase the rent, but still the rent is about $200/mo. below market. Its a cute place but it is on my list to liquidate due to its age (built in 1955) it has ongoing maintenance issues and is on a heavily wooded lot so there are always tree trimming/huge branch falling issues, too. Now that I'm retiring and traveling more, its just a rental that needs more attention than I desire.
The tenants have some challenges finding another place due to their disabled adult daughter and two dogs. Since the housing market is tight here for SFH's, landlords have no trouble leasing places and a tenant with severe mobility issues can be a bit scary. These folks did a short sale 7 years ago, but otherwise had okay credit 4 years ago when I leased to them. They had been living in an apartment before moving to this rental and it had taken them about 4 years to find my place. Its a retired couple and their daughter. I don't think they have savings for a downpayment. I would gladly sell the house to them at a reduced rate but also they told me last year that they want a bigger place. So that means they will have to move. They keep the house nicely landscaped and the interior is always clean. Clean but crowded due to many, many home hobbies.
I think the house will show better vacant and buyers would also be a difficulity for the daughter. I want to give these folks plenty of time to find a new place. The lease expires in June. How much notice would you suggest I give these tenants, and what are some of the downsides of giving them extraordinary long notice of my intent to sell the house?
In their situation, I would give them notice now, and let them know that they technically have until the end of the lease in June, but if they find a place sooner, you would gladly let them out of the lease with no penalty. You should tell them the end of the lease is the absolute latest they can stay in the house and will not allow a month to month because your intent is to sell. Remind them that they've been great tenants, and you're giving them so much notice so they can take their time to find the right place for them and that you'll give them rave reviews if someone calls you for a reference.
You're giving them 9 months to leave, that is plenty of time. Also, their lease would transfer to a new owner if you want to sell before then. You can sell it a way agents hate, but that's saying they can view the inside upon an executed contract. However, I doubt it would be easy to sell to another investor when you're renting so far below market value...
Falconhead gave you great advice. And may I say you BOTH sound like nice folks (as well as great landlords).
I'll only add that you might ask your tenants again if they are intetested in buying this house. Things change and you never know what happens in other people's lives.
You might also consider adding that in addition to planning to SELL the house in June you will be asking them to allow you to show the house for X-number of days before the lease is up.
You could also give them the first offer to purchase so they would feel a little empowered. There are no money down plans. Maybe one is a veteran. You might consider selling to them for a little less than usual just for the ease of getting past the whole situation quickly and moving on.
You could also give them the first offer to purchase so they would feel a little empowered. There are no money down plans. Maybe one is a veteran. You might consider selling to them for a little less than usual just for the ease of getting past the whole situation quickly and moving on.
Thanks; I have sold rental houses to tenants at reduced rates in the past and its such an easy transition for everyone. If they approach me about buying, I will let them know I will give them a good deal and I really would. However its just my personal belief that once I have advised a tenant that I'm selling the place its really up to them to come to me if they are considering buying the place. Just puts me in a better negotiating position.
In their situation, I would give them notice now, and let them know that they technically have until the end of the lease in June, but if they find a place sooner, you would gladly let them out of the lease with no penalty. You should tell them the end of the lease is the absolute latest they can stay in the house and will not allow a month to month because your intent is to sell. Remind them that they've been great tenants, and you're giving them so much notice so they can take their time to find the right place for them and that you'll give them rave reviews if someone calls you for a reference.
You're giving them 9 months to leave, that is plenty of time. Also, their lease would transfer to a new owner if you want to sell before then. You can sell it a way agents hate, but that's saying they can view the inside upon an executed contract. However, I doubt it would be easy to sell to another investor when you're renting so far below market value...
Thanks for your guidance; I was concerned too early a notice would weird them out. I sent an email earlier today and received this nice email in return a few hours later:
[/i]Gosh, I understand completely. You had told us upfront several years ago that you wanted to sell 1818 in a few short years. I'm not really surprised by this notice. I do appreciate your telling me early on. I appreciate, as well, the privilege of being able to move out any time prior to June. That's great to know.
You've been spectacular as a landlord. Thank you for everything. We will begin brainstorming about our next move.
Location: Sodo Sopa at The Villas above Kenny' s House.
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That was big of you to give so much notice. I had oddly the same kind of situation at my prior rental. It even had an 1812 address(pretty close). The big difference being my family got 30 days notice before the end of my lease. We had lived there 4 years. It was a horrible position to be in having a child in school and pets,plus no extra savings for moving costs etc.... My landlord lived across the street from us. Our kids played together. They didn't notify us sooner because they didn't want to risk us leaving earlier and losing the money in rent. They already had the construction crew scheduled for the day after the first. They knew way before the 30 day notice. It still grates at me ,2 years later.
Update: Today we closed on the sale of this house TO MY TENANTS!!! They were able to get a no downpayment VA Loan at 4.5%. Their new house payment including taxes and insurance will be $340 LESS than the rent they were paying us. And, since I did not have to do any work to sell it, we gave them a great deal and the house appraised $6K higher than our sales price. It was a happy win-win for all of us and I am so pleased they are not displaced and will be able to afford this house.
Thanks much for the advise to give lots of lead time. We didn't really want to sell in this tax year but once they found out they worked hard to get the loan and also close before the end of the year so they can qualify for the homestead and 65+ tax exemptions offered here in Texas.
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