If you have an investment property you want to sell, but tenants still live in the house, you may wonder how to proceed. Can you sell the rental property in this situation? The answer is yes, but there are a few things to consider before moving forward.
You Can Sell an Occupied Rental Property
First things first: You can sell a rental property even if tenants are living there. Some real estate investors even prefer buying properties with great tenants already in place because it means immediate cash flow. But when you’re aiming for a smooth transaction (and maybe even a top-dollar sale), how you approach things makes all the difference.
Before listing, review the tenant’s lease agreement to confirm key details, especially the duration of the tenancy. Is it a month-to-month arrangement, or are your tenants committed for another year?
The remaining time on the lease will impact your options for selling and the marketing strategies you can use to sell the property. If the lease is month-to-month, you may have more flexibility to ask the tenants to move out with proper notice. But if there’s time left on a fixed lease, prospective buyers will need to honor that agreement, which they may or may not be willing to do.
Planning To Sell? Communicate With Your Tenants
Even though the answer to “Can you sell a rental property that someone lives in?” is yes, there are a few things you need to do first. Tenants have rights, and clear, respectful communication is key to making the transition as smooth as possible.
You should:
- Be up front about your plans to sell
- Provide plenty of notice before showings
- Offer incentives to keep the property clean and accessible for showings
- Comply with the lease terms if you won’t be renewing it
- Give the tenant plenty of time to move out
Happy tenants make for smoother sales.
How Selling a Rental Property Affects Your Taxes
Selling a rental property comes with tax implications, including capital gains tax if the property has increased in value. You might also need to repay the IRS for any property depreciation you claimed on your taxes, which can lead to a hefty increase in your tax liability.
A 1031 exchange allows you to use the proceeds from one investment property sale to purchase another. This potential workaround for deferring those taxes has strict rules and timelines, so talk to a tax pro before jumping in.
Selling a Rental Property Doesn’t Have To Be Complicated
Can you sell a rental property that still has tenants living in it? Yes, and it might be easier than you think; you don’t even need to worry about finding a real estate agent. Wise Property Buyers works closely with Detroit landlords to make investment property sales simple, stress-free, and fast, offering fair cash offers and quick closings.
Whether you’re planning a 1031 exchange, looking to offload a challenging situation, or just ready to move on, we’ve got your back. Request a no-obligation quote online or call us at (313) 513-8824.