Renting out a property can be a lucrative source of income as long as your tenants pay the rent consistently. In fact, when you are ready to sell, having tenants who pay the rent on time and have taken good care of your property can make it more attractive to an investor who can see the income-earning potential that will be immediately available to them.
But what if your tenants are not paying their rent? Can you still sell the property? The short answer is yes. However, selling an income property with nonpaying tenants can be particularly challenging because it can be hard to get them out. At the same time, you shouldn’t give up because there are still ways that you can sell your property even with nonpaying tenants.
Landlords come in all shapes and sizes, and some are more forgiving than others in letting tenants get behind in rent. But, if your tenant is won’t vacate the property, it’s time for you to act – a delinquent tenant is a poor selling point.
Let’s take a closer look at what you, as the current property owner, can do to recover money owed from nonpaying tenants or remove them from the property, and how you can sell an income property with nonpaying tenants.
Take the Nonpaying tenant to Court
There are many reasons that you can take a tenant to court. Sometimes, taking a tenant to court is the only way to receive the money you are owed from them.
- Make a claim in small claims court for the uncollected rent.
- Make sure you have copies of every communication you had with the tenant documenting your attempts to collect the rent owed.
- The court will hear the case and decide the payment the tenant should pay.
Filing a lawsuit against anyone can be a stressful experience, but it does have certain advantages. The main advantage, and the one many landlords hope for when filing a lawsuit, is that the case will never actually go to court.
The hope is that, after receiving the court summons, the tenant will want to avoid the hassle of going to court and potentially losing anyway. They would rather pay the amount the landlord is requesting or compromise on paying a lesser amount that the landlord agrees to accept.
Eviction
Another option to consider is trying to get the nonpaying tenants to vacate the premises prior to selling by initiating the process of eviction.
As of July 2022 pandemic-related eviction moratoriums have ended and if your tenant has been living in your rental property for six months or more and they have failed to pay rent for at least three consecutive months, then you can issue a notice of eviction. This will give them no more than one month to vacate your property before you can legally change the locks.
Either way, a tenant who owes you back rent is a liability when it comes to selling your property because taking them to court and eviction are laborious tasks. But what if you don’t want to go through the eviction process? What if you just want to rid yourself of the headaches and sell your property?
Try to Be Flexible
There are no easy options when it comes to collecting back rent these days, so you can try to seek compromises with your delinquent tenants.
One approach to consider is trying to leverage the delinquent rent owed to your advantage by forgiving the delinquent rent in exchange for the tenant moving out. Another option is to offer to pay for some or all their moving expenses. Or, you may decide to offer cash in exchange for the tenant to modify the lease and move out.
But what if you don’t have the financial resources to try these ideas to get your nonpaying tenants to leave and want, or need, to sell your property? Here’s how to do it.
Selling an Income Property with Nonpaying Tenants
The first step, once you’ve made the decision to sell your property with nonpaying tenants, is to give them notice. This will give them time to find another place to live and it covers your obligations as the landlord that is stated in the lease.
Next, since you are selling your income property with nonpaying tenants, it’s a good idea to find and consult with a good real estate lawyer. They can help you navigate any legal issues that might arise prior to the sale and help ensure that things run smoothly.
Then, you’re going to need to decide how you are going to sell your house. One option is the traditional route of working with a real estate agent. Another option is you can try to sell your income property yourself. A third option to consider that is becoming increasingly more popular is to sell your house for cash to real estate investor like Black Girls Buy Houses.
Some things to consider about each these options are:
- If you are selling your house through a traditional real estate agent then it’s best to let them list your house for sale as they will have a better idea of the ideal price point. Just keep in mind that most real estate agents don’t have the expertise to navigate a sale of an income property with nonpaying tenants and those that do don’t work for free. The average real estate agent commission is about 6% of the total sale of your house. This can cost you tens of thousands of dollars. And, because most property buyers will not close the deal with delinquent tenants still on the premises you are still going to have to deal with the financial burden of removing them.
- To avoid paying real estate commissions you can try to sell the property yourself. But, do you have the expertise to navigate any legal issues that may arise with regards to the delinquent tenants? It is difficult enough to find buyers for rental properties with existing tenants. It becomes even more complicated when the tenants fail to pay you the rent. Do you have the personal network to find and attract potential buyers? And don’t forget, you will still have to contend with the financial burden of removing the delinquent tenants.
- Selling to an investor with experience in buying rental properties may be your best option for selling an income property with nonpaying tenants. An investor can offer expert assistance to get you the best offer quickly and provide you an option where you don’t have to put up with tenants who cause you lost income. And, Black Girls Buy Houses has a Cash for Keys program that will relieve you of the financial burden of getting your nonpaying tenants to move out.
In Conclusion
Tenants living in a property who don’t pay rent can not only be stressful but can cost you money in the long run. While selling your investment property can be a very involved process, it is even more involved if you have unwanted and nonpaying tenants living in your rental property.
The good news is that Black Girls Buy Houses will buy your rental property for cash so you don’t have to worry about the hassle of selling your property and evicting your non-paying tenants. You can connect with us to learn more about how we can help you sell your income property with nonpaying tenants.