Can you have a property for sale but still rent until you have a buyer? The property was on the market, and after six months the property did not sell. We decided to rent it, but we would still like to sell the property. How can we do this without having the property site empty?
Selling a property that is currently being rented out is no problem at all. In fact, this is precisely how rental properties are typically sold. It may well make it even easier to sell the property! Why? Because you actually have someone in the property paying rent, you’ve confirmed a minimum market value. That’s better than any “comp.”
Furthermore, the property is either generating some income, or partially paying for itself. If it’s the former, this makes the property particularly attractive for a potential buyer. The investment market is vast, though sometimes overlooked by those focused on the single-family, first-time buyer or owner-occupant market. Many of these transactions take place with less realtor involvement (and lower commissions)
So don’t worry about the property being currently rented as a negative. It’s not, by a long shot, and quite possibly a positive. It will, however, likely change how you market the property. You may, for instance, want a real estate agent who specializes in investment properties.
One word of caution: You must be very careful about accessing the rented portion of the property when you have a tenant living in it – even if the tenant is away. Most states require you to provide notice to the tenant, and you cannot access the rented portion of the property in order to show it to a potential buyer before a minimum amount of time has elapsed from your notice of intent to enter.
Your state, Pennsylvania, is different: It’s one of only a handful of states that has no minimum notice required. So if your property is in Pennsylvania, the general rule is courtesy.
That means in the absence of a written statute, my suggestion is to provide the tenant with reasonable notice (a day or two is fine), and keep the entry generally during business hours unless you get an agreement otherwise from the tenant in advance.
Most experienced rental property buyers are familiar with that rule, so it shouldn’t pose much of a problem. You’ll just have to plan ahead a bit and make an appointment to show the property.
The bigger headache will probably come from careless or immature or rookie real estate agents just “showing up” with someone during a drive-around and knocking on the tenant’s door asking to see the property.
Warning: Never use a “lockbox” on a rented property. These are combination locks with a key to the property inside that real estate agents sometimes use to give the agent access to a property if he or she needs to get in to show a property or prep the property. The use of these lockboxes are not appropriate where a tenant actively occupies the unit.
Instead, put up a sign that says “shown by appointment only” or similar language, and contains your agent’s number.
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.