If you own a Pittsburgh rental property and are considering selling it, you may be wondering how the process works if you currently have tenants living in the building. This is a common concern held by many landlords who are ready to sell their rental properties. The good news is that it’s possible to sell a rental property with tenants. That said, there are a few things you need to keep in mind in order to stay compliant with your lease and Pennsylvania landlord-tenant laws. In today’s article we’ll discuss some of the most important things to consider when selling a rental property with tenants.
How Do I Sell a Rental Property With Tenants?
The two things you must do before selling your property are 1) familiarize yourself with Pennsylvania’s landlord-tenant laws, and 2) review your existing lease with each tenant.
Read Pennsylvania’s Landlord-Tenant Laws
First and foremost, make sure you do not violate any of Pennsylvania’s landlord-tenant laws. If you aren’t familiar with these as a landlord, you should definitely review them before selling a tenant-occupied rental property. Make sure you’re also familiar with any local landlord-tenant laws in the city or borough where you live.
Review the Lease
Hopefully you have a written lease with your tenants. If that lease was created by a reputable attorney or property management company, it should have language about what happens to the lease if the building is sold. If your lease doesn’t contain language like this, you may want to consult with an attorney before moving forward. Most of the time, leases remain in effect when you sell a rental property with your tenants. If this is the case, both you and/or the new owner can’t ask tenants to vacate the property because you have decided to sell it. Even if you sell a property with tenants living there, a new landlord must respect terms and conditions of the lease agreement until it expires, if not otherwise stated.
Wait Until the Lease Expires
If you don’t need to sell a rental property quickly, it may make sense to wait until the lease expires. You can then choose not to renew the lease for that tenant. This is a great way to get a property repaired/improved prior to selling it. By doing so, you’ll be able to increase the asking price of a rental property dramatically. The disadvantage of selling unoccupied rental property is that some buyers are interested in purchasing “turn-key” properties, or properties that are already making money. Plus, during the period when the property is vacant and waiting to be sold, you will have to pay property maintenance expenses such as utilities and insurance without the assistance of rental income. There’s really no right or wrong answer when it comes to keeping the tenants or not renewing their lease; it just depends on your unique situation.
Steps to Take Before Selling a Rental Property with Tenants
Now that we’ve discussed both yours and the tenant’s legal rights. Let’s talk about the tactical steps you need to take when selling a rental property with tenants.
- Notify the tenants
You should notify the tenants about your plans to sell a rental property ahead of time. It’s always a good idea to communicate proactively with tenants and let them know you are selling the building. Many landlords think they should do just the opposite, as they don’t want to scare the tenants into moving out. However consider this: your tenant might be a great person to purchase your property. If the tenant has lived in the building for a long time and doesn’t want to move, perhaps they will make you a competitive offer to purchase the building.
- Communicate with the tenants
It’s critical to communicate with tenants when you are showing the property to prospective buyers. Nobody likes to have someone knock on their door at all hours of the day without having a chance to tidy up or look presentable. Whether you list your house with a real estate agent in Pittsburgh or sell it directly to a company that buys rental properties, potential buyers will want to see every square foot of the building. That means you will want to give your tenant at least 24 hours notice before each showing so that they aren’t surprised when a stranger shows up to walk through their apartment.
- Don’t forget about the security deposit
Oftentimes when you sell a tenant-occupied rental property, the buyer takes ownership of the existing leases. If you asked for a security deposit from your tenants when they moved in, this would be included. Don’t get taken by surprise at the closing by not knowing how much you collected for a security deposit. You have to transfer this deposit to the new buyer at closing if you are selling your rental property.
Consider Selling a Rental Property with Tenants to a Real Estate Investor!
Despite all the proactive steps you might take, some tenants still don’t cooperate with landlords during the process of selling a rental property. If your tenants are causing you a headache, we’d be happy to help you through the process and make an offer to buy your Pittsburgh rental property. McIntosh Management, LP specializes in working with landlords and rental property owners in Pittsburgh and can take away the stress the often comes along with selling an occupied rental property. The benefit to working with us is that we don’t care about the condition of your rental, and will offer you a price to buy it AS-IS. We also understand the specific Landlord-Tenant laws, so you won’t have to spend money talking to an expensive attorney. If this option sounds easier to you, give us a call today or fill out our form below to get started!