How to Sell a House With Tenants in Kansas City

You’ve worked hard. You bought the property, you got it all fixed up, you have it rented and now you’ve decided it’s time to cash it in. Or perhaps the whole process has just been a bit much and you want to get it sold while there are decent renters who are paying. Either way, you want to sell a house with tenants in it.

But when you have renters in your property, it’s not just as easy as sticking a sign in the yard, having multiple showings, and inspections. You don’t want to hassle the renter. It takes a bit more finesse and management in the entire process if there are renters in the property.

You can sell a house if it is rented with tenants living there . . .

It’s your house and you do have the legal right to sell it to someone else. Even if it is rented.

But to keep your good tenants happy and paying their rent, and not disappearing in the middle of the night, you do need to keep in mind that it is their home and they do have legal rights when it comes to that home.

Plus, when it comes time to sell a rented house, it is much easier with a happy renter who will cooperate. The less you inconvenience them the better.

Legal Rights Stated in the Lease

When your tenants moved in, they should have signed a lease that outlines how long that lease will remain in effect. This might be a year lease that they just signed a few months ago, which gives them legal rights for the rest of the year. It might be a shorter lease. It might have even been a long-term renter whose lease was never renewed and is now living there month to month. Or perhaps it is a lease written in the past few covid years where many landlords switched to month-to-month leases.

So, take a minute and review your lease and see what it says. When does the lease run out and when do you need to renew it or give the renters notice that you will not be renewing it? It may be that you want to get them renewed for another year so you can sell the property with a cash-flowing tenant. It may be that you want to not renew it so you can do some renovations after they move out and list it as a vacant renovated property. It may be that the property is more valuable as a rental or it may be it is more valuable vacant.

Selling a Vacant Rental

There are many situations where you might decide to sell the property as a vacant rental.

Their Lease Is Up and They are Moving Out

This is usually the easiest scenario. The renters’ lease is up and they voluntarily move out. Leaving you with a vacant property that you can sell “as is”. Or you could make some repairs and updates and sell it as a renovated property for a bit more money.

Their Lease is Up and You Give Them Notice of Non-Renewal

This can sometimes turn into a huge hassle. The renter’s lease is up for renewal, but following the rules in your lease, you give them notice to move out. If all goes well, they follow the lease and your notice and they move out. But they might not be happy and they might not want to leave. And in some states, they might not have to. Kansas and Missouri if the renter does not want to leave, you have three options: Keep them and write a new lease, pay them to move out to earn their goodwill, or in a worst-case scenario you might have to evict them.

Paying for Lawn Maintenance or Cleaning

If you are selling a single-family home that has a renter who will be moving out soon, you might want to try to find a buyer who will close as the renter moves out. Build goodwill with your renter by being very cooperative with their schedule and perhaps, offer to pay for a house cleaner and also lawn maintenance. A cooperative renter will be way easier to work with than one who is unhappy.

Would The Renter Want to Buy Your Rental

Another option when you are ready to sell is to sell it to your renters. If they are interested in buying it and can afford it, they might be able to give you a down payment and go get a mortgage. In other cases, they might want to buy it, but need a bit of help, in which case you might consider selling the house to them with seller financing. Seek the help of a professional to help you through the process. An agent or an attorney could be very valuable in writing a contract and finding a good mortgage company to finance the buyer.

Should you go down the seller financing route, be sure to get help from a person knowledgeable in seller financing. You will want to make sure you follow all the steps needed to create a good marketable seller-financed note. Your seller-financed note can be sold to a person like us here at kcmoHomeBuyer or others who buy notes.

Do You Have Another Unit

Sometimes you might want to sell as vacant but have a renter who has nowhere else that they can find to go. If you have other units they could move to, you might speed up the process of getting the unit vacant. Or if you know others in the industry with rental property, you could help your renter find a place through your network of landlord friends.

Selling a Rented Property

Sometimes it just works out that when you are ready to sell you have a renter that has a valid lease and will be living there while you sell it. Sometimes it turns out the house is worth more as an occupied cash-flowing rental. And sometimes the property might be a rental property as is the case with an apartment building.

When it comes to selling a rented property there are some steps you can take to make the process much easier and to earn you the best possible return.

Be Honest With Your Renter

This is their home. And you don’t want your tenant to be browsing the internet and find out randomly that their home is being sold. If they find out this way, they will be scared and unhappy. More than likely they will try to sabotage the sale. But if you are honest upfront and let them know you are seeking the most qualified buyer to become their new landlord and that the new landlord will be honoring their lease, your renter is going to be much more cooperative.

Your Numbers

When you are selling a rented property, the most likely buyer of that home is going to be another landlord. They are going to want to see the numbers on the property. So take some time to gather together all your records:

  • What the renters pay in rent?
  • If they pay late, what do they pay in late fees?
  • Do they have other rental fees for pets, for parking, and for other things on the property?
  • Is there another income source on the property like vending machines or coin-operated laundry?
  • Who pays for all the utilities and if it is the landlord, what do they cost?
  • What do you spend on property managers?
  • What have you spent on repairs and maintenance while you owned it?

Some buyers, especially if the property is an occupied multi-unit property will want to see your profit and loss for the property or tax returns. They want to see actual numbers rather than made-up estimated proforma numbers.

Extensive Photos

When you are selling an occupied rental, potential buyers do want to “see” the property. They can do that through extensive photos or a great video walk-through. Or you could spend some money to create a 3-D Matter Port Tour that gives potential buyers a very real video tour without stepping foot in the property.

Spending 30 minutes to an hour to get good photos and video so you can create some sort of digital viewing of the property online, is way easier. You can market with these photos and do multiple virtual showings saving you, your renter, the property manager, and your Realtor a lot of time.

Showing the Property

You don’t want to jump in your car to go show the home to every possible buyer. Instead, market the home based on your photo tour and the numbers. Here at kcmoHomeBuyer we have negotiated sale contracts on multiple rented properties from single-family homes, packages of rented single-family homes, duplexes, 4 plexes, and several apartment buildings all based on the photos and the numbers. Once we had an agreed-upon contract and the buyer was in their due diligence period, then and only then would we let the buyer review documentation and have a physical walk-through.

The Documentation

This is everything that pertains to the rental on the part of the renter. These are not documents you want to post on the internet for everyone to see. These are documents that you probably would not share with a potential buyer until you have the home or property under contract. This would include the lease, the renter’s application, any screening reports, and any communications with the renter. This will be the buyer’s opportunity to get to know a little something about the renter.

Physical Walk Through

Now, after you have a contract and the buyer has reviewed everything – the numbers, the photos, and the documentation, now it’s time to inspect the property. Be sure to follow the lease and make sure the renter is given ample notice that you or your representative (like your property manager or Realtor) and the buyer or their representatives will be walking through the property. If the buyer wants to have any home inspections done, this is the time to get them done. This way you disrupt the renter’s life only twice, the day you took photos and the day of this walk-through and inspection.

Be respectful of your tenants and their time. Try to fit their schedule. And whatever you do, don’t lie to them about who is walking through the property, they are going to figure it out.

Renter is Behind on Rent

Because not everything goes according to plan or to the lease, you may have a rental property where the renter has been late. Not exactly good information to help you sell an occupied rental. Here again, you have three options:

Lie to Potential Buyers

This is an option that some landlords take. But it’s not a good option. People that are in the business of buying occupied rental properties are going to do their homework and while you might get the home under contract, the buyer will back out as they work through their due diligence process. Buyers are going to figure it out.

Get the Renter to Move Out

You might approach the renter and let them know you are planning on filing eviction that would go on their record once completed making it harder for them to find a rental in the future. Offer them the option of moving out right away and you will forgive all unpaid rent, not file eviction, and perhaps you could sweeten the pot by offering them cash for keys. I know, letting the renter off the hook and paying them to go away is not ideal, but it can save a lot of time working through the eviction process and quite possibly save you a lot of money in damages that the renter might cause during that eviction process and subsequent move-out.

File & Complete an Eviction

Most buyers are not willing to take over a non-paying renter or to take over an eviction in process. Some will, but they will want a huge discount on the price. If you need help with an eviction, we recommend Julie Anderson and her team at Anderson & Associates, you can find them at MOKSLaw.com

And if you have any questions about what’s in your lease or what it means, Julie and her team can help you sort it all out.

Accidental – Non-Professional Landlords

Sadly, many become landlords by accident. They inherit a rental property. Or they inherited a house or buy a new house and keep their old one. That extra house gets rented out. But because they are not professionals and don’t take time to get expert advice, they don’t screen their renters properly and they don’t have a quality lease governing their relationship with a renter. They end up with lots of headaches, and hassles, and then they call us. Need some advice, we can point you in the right direction.

Ready to sell a house with tenants in Kansas City? Why not give us a call? We can offer several options and work with you to handle all the issues that come with selling an occupied rental investment, no matter what type of tenant you have. Discuss your rental property situation with a seasoned professional investor like Scott Tucker at kcmoHomeBuyer, with no obligation.


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Jason F in Lenexa

On top of the process every step of the way!

Great experience.  I was selling my fathers house. Very glad he sent a letter.  The house was dirty, it was stinky, it was packed with junk.  I just didn’t want to deal with it.  

I called Scott as well as several of the ads I found on google for people who buy houses.  Scott was great, he showed up when he said he would, he listened to what I had to say. He made me an offer and left it with me so I could “sleep on it”, which gave me time to review if with my brother.

Scott was on top of the process every step of the way, making sure I was informed and knew what was going on and when we had some paperwork issues at the title company, helped me work through that as well.

If you want a hassle free sale, give Scott and kcmoHomeBuyer a call.

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