Mar 4, 2022 / Selling
How to Sell a House with Renters
When it comes to investments, you will be hard-pressed to find a safer or more successful vehicle than real estate. It’s one of the few things you can buy that will almost certainly appreciate in value over time. In fact, housing prices have been climbing steadily. If you purchased a house in 2000, you could likely sell it in 2022 for twice as much.
This is excellent news for anyone who bought their property even a few years ago. Of course, one of the ways to maximize your purchase is to find renters, even if it’s just one room in the house. The regular income you receive can cover the cost of your mortgage and then some, which builds up your nest egg even further.
Maximizing Your Investment
That’s why countless homeowners converted basements, top floors and other parts of their homes into rental units. It helped with the monthly household costs and increased the value of the property.
While renting part of your home or owning multiple properties could be a great way to earn extra income, there may be a time when you want to cash out of that investment. Perhaps it’s time to look for a new property to invest in. Maybe you’d like to sell the home to fund your retirement or cover the cost of schooling for a career change.
Whatever your reason for selling, the timing has never been better. Housing prices soared in 2021 and have increased even more in the first few months of 2022.
However, if you want to sell a house with tenants, there are a few rules and laws you need to know about.
Every landlord should familiarize themselves with the Ontario Landlord and Tenant Board. Staying on the right side of the law will protect your investment and save you countless hours of wasted time and headaches throughout the process.
A few basic guidelines will help keep you in compliance with Ontario law when selling your rental property:
Selling Does Not Void a Written Lease
As a landlord, you can sell the property whenever you choose. However, you cannot sell the house as a way of evicting a tenant with a written lease agreement. When selling the home, you must advise the potential buyer that there are tenants. The new owner must honour all terms of the lease. In other words, the tenants come with the property.
You Must Provide Adequate Notice to the Tenant
When a lease expires and is not renewed, it transitions into a monthly term. At this point, you can ask the tenants to leave, but you must provide 60 days’ notice to allow them to secure new accommodations. If you want to wait until you have an offer on the home, you’ll have to negotiate with the buyer for enough time before the closing date to allow for this notice.
Notice Of Landlord Entering the Premises
As the landlord, you have the right to enter the tenant’s unit, provided that you give them 24 hours’ notice. This includes giving notice whenever you or the Realtor® want to show the home to potential buyers. Renters must comply with the owner’s request, but they do not have to prepare the house other than maintaining the basic cleanliness agreed upon in the rental contract. If the showing gets cancelled, you should also notify the tenants. The tenant will often want to be on-site during these walk-throughs, but their presence is not required.
Rather than give notice every time you have a showing, you might consider negotiating a set block of time with your tenant that suits everyone’s schedule. For example, you will showcase the house every Tuesday and Thursday from 2 – 4 pm, unless otherwise notified.
Commit to Selling Before Advising your Tenants
Sharing your thoughts on selling before you are fully ready may hurt you in the end. It can damage your relationship with your tenant and make things awkward if you decide not to sell after all. Preparing a house for the market takes time. There will almost certainly be minor repairs and upgrades you’ll want to make. If your tenant hears a rumour about a possible sale, they may move out before you’re ready. Wait until you have the sign on the lawn, then let your tenants know that you will honour your end of the agreement. Be open and honest with timelines once your house is on the market.
Target the Right Buyer
Targeting the right buyer will save you a lot of time when selling an investment property and help you make more money from your sale. A home with a tenant may be a turnoff to a buyer who wants to move their family in right away. The best buyer for your situation may be another investor looking to add to their portfolio. Since up to 25% of all homebuyers are investors, you still have a large pool of buyers to market to.
Want more advice about buying or selling an investment property? Here is some more must-have information for you:
- The BRRR Investment Strategy
- Is it Better to Sell or Rent Your House
- Three Creative Tips to Make Your Old House Look Brand New!
We love working with investment properties and landlords! Our team of real estate sales professionals is committed to helping you find your dream home. Whether you’re looking to buy or sell, the Karen Paul team is here to help with any questions.
Interested in learning more? Send us a message here and we’ll be in touch with you soon after.