How to Sell a Rental Property

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How to Sell a Rental Property

Dealing with toilets and tenants can take a toll on you. When the hassle of being a landlord outweighs the benefits, you may be ready to start the process of selling a rental property.

The time and money you spend on your rental property may not be worth it anymore. That’s especially true if you have lengthy vacancies, tenants that need to pay rent, or you need to make expensive repairs to significant home systems like HVAC or plumbing. When you took control of the investment property, you probably had an exit strategy for when you’d had your fill of being a landlord, so now might be the ideal time to sell your rental property.

Selling your home can be daunting if you need help figuring out where to begin, and selling a rental property entails even more effort. To that end, we’re here to help with our guide outlining the process of selling a rental property and providing critical information you’ll need to know as you navigate the process.

Selling a Rental Property–Information and Advice

How do you know when selling a rental property is right for you? Experienced landlords and owners understand when it’s time to part with their rental properties, but various factors come into play. Here are the primary reasons why they want to sell:

Taking advantage of appreciation

Even if investment properties have yielded positive cash flow, you may find it more beneficial to sell off the property instead of continuing to rent it out. This decision allows you to capitalize on the market appreciation and increased property value.

It’s a money pit

Alternatively, not all real estate investments yield the same return from rental income. While most will bring investors a positive return on investment, some drain your money on repairs and upkeep. This is especially true for properties that do not have the potential to be profitable in the short term.

Even though a specific property may have experienced an impressive surge in value over a few years, if the maintenance costs cause it to break even or generate losses, you might consider selling before losing more.

Unending issues

Homeowners may find that managing rental properties can be a source of great stress, sometimes leading them to put their houses up for sale. Often this is because they are chasing seemingly lucrative deals without understanding the complete requirements and expectations they must manage to make it work.

But slowly, you began to face various difficulties related to their investments – bad tenants, run-down neighborhoods, property taxes, depressed real estate market, required renovations, and inflation. These adversities eventually made selling the most practical choice for you.

You want to move

Sometimes, property management duties may leave you with no option but to sell your rental homes. For instance, if you need to move to a new state or country and can no longer operate the rental business you had been running would be an example of such a life transition. You can take the money from the home sale and invest in a new property closer to where you relocated.

How to Sell a Rental Property Landlord Rights When Selling a Property

Landlord Rights When Selling a Property

As a seller, navigating the sale of a property with a tenant residing in it can be incredibly complicated. When marketing and showcasing the home, you must keep your needs as the seller and the tenant’s rights under their lease or rental agreement. Also, you’ll need to follow any state or local legal requirements that may apply.


If your tenant breaches the terms of their tenancy agreement, it is within your rights to evict them from your property. However, you are not entitled to evict a renter simply because you wish to sell the house.

It is still legally theirs until the lease ends, and they have every right to continue living there. Even once the property has been sold by you, any new owner must honor whatever agreements had initially been made with those renting out then.


As a rental property owner, you have every right to continue collecting monthly rent payments until your sale is finalized. Even if tenants express their desire to stop paying rent after you’ve announced the pending sale, they must abide by the law and make regular monthly deposits into your account up until the closing day. These funds must be accounted for to ensure a smooth transition from one ownership period to another.

Right to enter the unit

As a landlord, you have the legal authority to enter your home. By law, landlords must provide occupants with 24-hour notice before entry into the residence.

Security Deposit

When tenants move into your property, they usually provide a security deposit which can be used to cover repair costs and unpaid bills. If damage has been inflicted on your property’s fixtures due to them, you can retain their security deposit for compensation.

How to Sell a Rental Property Tenants' Rights When Selling a Property

Tenants’ Rights When Selling a Property

If your rental property is currently occupied, you can attempt to negotiate with the tenants and offer them an incentive to vacate. However, if they refuse or you have a long-term tenant that could be seen as beneficial to potential buyers, you must honor their lease agreement.

Advance notice

To ensure tenants’ rights are not violated, landlords should give a minimum of 24-48 hour notice before entering an apartment. If this is not feasible, the landlord and tenant need to devise a reasonable time frame upon which both parties can agree. The law requires that all proper notices be documented in writing.

Break the lease for cause

Tenants should pay rent in full as long as they reside on the property. However, if landlords neglect to honor their contractual obligations or disregard any valid grievances of tenants, these individuals may choose to terminate the lease early.

Cash for keys

Landlords can provide tenants with a financial incentive to vacate the property earlier than their contracted lease term by offering them an exit payment.

Notice to vacate

One of the most important rights tenants possess when a residence is up for sale is to receive notification that they must vacate the premises. Even if the month-to-month lease expires at the end of this period, it’s imperative that landlords still provide prior notice before tenants are required to leave.

Original lease terms

Although the property has been sold, tenants have entitled to their remaining lease terms and all benefits their former landlord granted until then. This includes any waivers or complimentary amenities extended in the previous agreement.

Relocation fee

Your renter may receive monetary compensation from your landlord if they decide to sell their house. Depending on the situation and various state laws, landlords may be obliged to pay for relocation costs incurred by tenants.

Informing Your Tenants of Your Desire to Sell

When selling a property with tenants, there are ways to ensure the transaction goes off without a hitch. Regardless of whether or not the tenant will remain in residence after closing, it is beneficial for both seller and tenant to keep track of showings and ensure the home is tidy throughout this process. Though moving can be overwhelming, even if they’re leaving upon completion of the sale – helping them stay organized during this period will ease stressors on all sides.

You’ll need to give at least 24 hours’ notice when scheduling showings (or whatever is specified in their lease). Additionally, if there are any times or days that cannot be accommodated due to the tenant’s schedule should be honored.

To guarantee that prospective buyers and other real estate agents observe your preferred viewing times, you can contact the occupant with a special request to exhibit the house earlier. However, unless both parties reach another understanding, entry rules for showing must still abide by what’s listed in the lease agreement.

How to Sell a Rental Property Offering Tenants The Opportunity to Buy

Offering Tenants The Opportunity to Buy

Weigh the pros and cons of accepting a less competitive offer from your renter, as taking them on may still be significant benefits.

When pricing a rental property, it’s essential to consider the convenience of selling directly to tenants. You can save yourself time and hassle with no need for repairs, contractors, cleaners, photographers, or hosting an open house – you can post it online and let your potential renters come to you!

With a tenant already in place, you don’t need to stress over marketing and selling your property. This eliminates any challenges that come with finding an interested buyer while they are inhabiting your home.

When you sell your rental property to its renter, you won’t be allowed to utilize the homeowner exclusion for capital gains tax because it is not classified as your primary residence in IRS’ eyes. This means that all proceeds from this sale will be subject to a tax bill. The tax rate is high for both short-term capital gains and long-term capital gains tax.

What If My Tenants Don’t Want to Leave?

Specific regulations regarding landlord and tenant relationships are dependent on your geographic location. To ensure you act by the law, it’s vital to confirm what is permissible by checking with local laws. 

Before you decide to take any legal action, start by being just and compassionate with your tenants. Since trying to reason with them is usually the most favorable alternative for both parties involved compared to an extensive court process, it’s always worth a shot! If all goes well, you’ll be able to get them out of your rental property without ever having to enter into a lengthy legal battle.

Before making any decisions, you’ll need to check the current lease agreement you and your renters signed. Doing that will ensure you can take the most appropriate action and identify the options for this situation.

If your tenants fail to pay rent in most states, you can use this breach of the lease agreement as grounds for eviction and regain control of your property. Don’t hesitate to exercise your legal rights if getting them out is best for you.

At times, the only recourse is to initiate an eviction procedure. However, evicting a tenant can be costly and complex. Depending on state laws, you must take care of various stages in this legal process before it’s all said and done.

In some states, tenants must receive legal notice before potential eviction. This needs to be done through more than just a call or email; you must take the appropriate steps to ensure your notification has been properly documented and delivered.

This is essential for proof of providing proper notice so that no additional issues arise from a wrongful eviction. Giving tenants this chance allows them time to either pay past due rent or vacate within a set timeframe before any further action is taken against them.

Another option is to sell to a real estate investor and let them handle the problem tenant. Typically, you can sell the house “as is” with a difficult tenant and get a cash offer on your home. Property investors specialize in dealing with those problems and may give you a competitive sale price.

How To Sell a Rental Property with Tenants Attached

It is now time to put your tenant-occupied property on the housing market. An uncooperative tenant can significantly hinder the selling process, so respecting the conditions of any lease agreement you have made is vital. Adherence to the lease obligations could mean the difference between a smooth and challenging sale.

The best way to go is the month-to-month lease. This rental agreement offers optimal flexibility for renters since they only need a notice period between 30 to 60 days before their move-out day. As a landlord, you must follow the terms outlined in your tenant’s lease and ensure you have enough time before leaving the property.

When you have a fixed-term lease, the selling process may take longer than desired. However, should your tenant be reliable with rent payments and keep to the terms of the agreement, they can stay for the length of the lease – barring any early termination provisions within their contract.


Selling a rental property that has existing tenants attached is a challenging task. It’s important to remember that landlords and tenants have certain rights depending on their state. So, you must be familiar with your local laws to ensure you follow them.

You must also give proper notice and respect the terms of any existing lease agreements, as failure to do so could result in costly legal consequences. Considering all potential scenarios can help save you time and money when selling a rental property.

When you sell your home, you must know the tax rules governing the transaction. The profits you generate may be taxable income. It’s best to consult a tax professional to help you navigate your specific situation.

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