When the time comes to sell your rental property there is often times the dilemma of trying to sell it while you have tenants in the property. Having tenants in place can be a good thing if you have everything in order.
The picture you are trying to paint when selling a home with tenants in place is that it will be a good cash flowing investment for your buyer. Below is a checklist of items you will want to have in order to make your income property as attractive as possible to an investor buyer.
Active Lease Agreement. If you are marketing the property with a tenant in place then you need to make sure you have an active lease with your tenants. More times than not a landlord with forget to renew the lease once a tenant has been in the property for multiple years. An active lease with have a start date and expiration date clearly stated. Make sure all parties involved have signed the lease
Cash Flow. The benefit to buying a home with a tenant in place is that the property will cash flow once the new buyer purchases the home. You will need to know things like current rent, mortgage payment on new purchase price, property taxes, insurance, utilities and any other misc expenses. Once you take the current rent minus all the expenses then you should end up with a positive number. If the number is negative then either the property is priced too high or the rent is too low.
Clean Property. Let you tenant know the keep the house clean throughout the selling process. Let them know that a buyer could ask for a walk through at any time so make sure to keep the place 24 hours a day. This will also help the tenant because if the place is not kept clean then the new landlord may not want to renew the lease if they think the tenant is not very clean.
Pictures. Don’t skimp out on the pictures because you think it will scare off buyers. Buyers are aware that a tenant is in place so they should not expect a perfectly staged home. This will give potential buyers a good idea as to the cleanliness of the tenant.