Can You Sell A House With A Lease Option To The Current Tenant?
Here’s a question I get frequently from Sellers, “I’ve already got a tenant. Can we sell them the property on a Lease Option instead of trying to find a new LO Buyer?”
Find out my answer in this video – it’s not what you may think.
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Read Transcript for “Can You Sell A House With A Lease Option To The Current Tenant?”
“Thanks for answering all of our questions. If the property is currently tenanted, what do we do? Do we still market the property as per normal and take buyers to view it?” – Clara Lao
Joe: First of all, you need to find out what the seller’s plan is and what the tenant’s plans are. Some people say, ‘Well, could I just to go to that seller and sell it to them on a lease option and take a lease option fee?” I’ve never seen that work ever, so I wouldn’t bother with that situation. It’s possible they could have some extra money but the likelihood that they want to buy that house – I think it’s unlikely.
Joe: Don’t mess with that. Instead, ask the seller, ‘When are these people going to be out of the house?’ If they’re going to be out in just a couple weeks, it might make sense to wait for them to move out, or, if the seller’s willing to work with that tenant, a lot of times a tenant maybe wants to move out before the end of that lease.
Joe: What you can do as a seller is tell the tenant, ‘Allow us to show the property, keep it nice, and let us show it whenever we need to, and then we’ll let you out of the lease as soon as that new person moves in.’ That way, they don’t have to pay months and months on their lease, you can get a new person in there and you can get cooperation from them to show it.
Joe: Sometimes you have a tenant in there who’s not paying, and then you want to get your seller to hire an attorney and get them evicted and out of there as quickly as possible. Sometimes you want to say to the seller, ‘Why don’t you give them $500 to move if they’ll leave by next Wednesday?’ If they’ll do that, then you can solve the problem that way.
Joe: It’s very difficult, well maybe not difficult – it is more difficult to sell a property that has a tenant in it than it is to sell a vacant property because the tenant doesn’t have an interest in keeping it filled. Use some of the techniques that I just gave you in order to work with those tenants to get them out of the property so you can get it sold.
Joe: The other thing you can do is go to the seller, and let’s say we have a tenant we want to keep because he’s a good, strong, solid tenant, but he still wants to sell that house – He needs an investor to buy that property. What we can do is take that property “Subject To” or we could sell it on a land contract to a new investor.
Joe: That would be a very easy property to sell and get $10,000 down from an investor who will maybe get $200 a month income on it from his $10,000 – that’s a 24% return on your investment – that’s a great deal for an investor, plus he gets a property he doesn’t have to qualify for and he leverages out his income and buys a nice property, so there’s that way as well. I hope that helps. Thanks.