Selling Your Rental Property to a Tenant

Do you own a rental property with a tenant? Is your tenant looking to purchase your investment property? If so, you’ll want to ask yourself one thing first.

Do you want to sell your rental property? 

If you do not want to sell your rental property to your tenant, let them know and allow them to continue to rent. However, you may want to consider selling the investment property to them down the road if you aren’t ready today, or if you believe the price of the home will increase.

If you do want to sell, there are a couple of ways to approach this.

Options for Selling your Rental to your Tenant

Rent-to-Own Option

One way to help yourself and your tenant is by letting them rent-to-own. In this strategy, you let your tenant(s) rent for another year before you allow them to purchase your investment property. In this year, you can raise the price and afterwards they can get a loan and “refinance”.

Often times, when a lease option buyer is getting a loan, it can be considered a “refinance loan” because they had the lease option agreement to purchase the home.

Sell Rental Property Directly to your Tenant

This is the most direct way to sell your investment property. In this method, you will want to start by doing comps for your property, to see what it’s worth. You may even want to consider giving your tenant a discount when selling to them. In this situation, everyone wins when your tenant purchases the rental property and you’ll save money in the following ways:

• Save on real estate commission
• No vacancy and making payments on a vacant home
• No need to redo carpet or touch up the paint

Typically, when a tenant moves out, carpet and paint are the minimum expense you’ll have to pay for, so it does make sense to give them a discount. Even if the discount is 5%, you’ll still come out of this a winner.

If you’re not selling, but are interested in buying. Options like unlimited funding programs are something I teach to new investors and seasoned investors.