You own a rental in Hampton Roads, and you are ready to sell. Maybe being a landlord got old, the house needs work, or you want to cash out. But there is a tenant living there. Can you still sell?
Yes. In Virginia, you can sell a house with tenants in it. You just have to respect the lease and the tenant’s rights. Here is how it works, your options, and what to know about taxes.
We are not attorneys or tax advisors, so check the details with a professional. But we buy rentals with tenants in place, and these are the questions landlords ask us most.
The Lease Goes With the House
This is the most important thing to know. Selling the house does not end a lease. If your tenant has a lease that runs through next summer, the new owner takes over that lease, and the tenant can stay until it ends.
- Fixed-term lease: The tenant usually stays until the lease ends, unless they agree to leave early or the lease has a clause about a sale.
- Month-to-month: Under Virginia law, you can end a month-to-month tenancy with written notice at least 30 days before the next rent due date, unless the lease says something different.
- Security deposit: The deposit moves to the new owner at closing, and the tenant should be told who has it.
Read your lease before you list. Some leases have rules about selling, showings or ending early.
Your 4 Options for Selling a Rental With Tenants
1. Sell to an investor with the tenant in place
Investors like houses that already have rent coming in. The tenant stays, the lease carries over, and nobody has to move. This is often the easiest option when you have a good tenant.
2. Wait until the lease ends
If the lease is ending soon, you can choose not to renew it, then sell the house empty to a regular buyer. An empty house is easier to show, clean up and repair. The downside is no rent while it sits for sale.
3. Offer the tenant “cash for keys”
You pay the tenant to move out early, often enough to cover moving costs and a deposit on a new place. Put the deal in writing, including the move-out date and the condition the house should be in.
4. Offer to sell to your tenant
Your tenant already likes the house. Ask if they want to buy it. You may save on commissions and showings, though they will need to qualify for a loan. Here are the pros and cons of selling a house privately.
Showing a House With Tenants in It
If you list a rented house, your tenant’s cooperation matters a lot. A messy house or an unhappy tenant can scare off buyers.
- Give notice before every showing. Virginia law requires reasonable notice before you enter, and your lease may spell out exactly how much.
- Keep showings to set times. Fewer, planned showings are easier on everyone.
- Offer something for their trouble. A small rent credit for keeping the house clean during showings goes a long way.
- Keep them in the loop. Tenants who know what is going on are less likely to worry or push back.
Paperwork Buyers Will Ask For
- A copy of the lease and any changes to it
- Rent history showing what the tenant pays and whether they pay on time
- Security deposit amount
- An estoppel letter. This is a short form the tenant signs confirming the rent, the deposit and the lease end date, so there are no surprises after closing.
Taxes When You Sell a Rental Property
Selling a rental is different from selling your home. A few things to know:
- The home sale tax break usually does not apply. You can only skip tax on up to $250,000 of profit ($500,000 for married couples) if you lived in the house for 2 of the last 5 years.
- Depreciation comes back. The depreciation you deducted over the years is usually taxed when you sell, at up to 25%.
- A 1031 exchange can delay taxes. If you buy another investment property, you may be able to put off paying tax on the gain. There are strict deadlines, so plan ahead.
Talk to a CPA before you sell. Our post on avoiding capital gains tax on a home sale covers the basics.
How We Buy Houses With Tenants
We buy rentals with tenants in place. You do not have to ask anyone to move, fix anything or set up showings. We take over the lease and the deposit at closing.
If your rental is in good shape with a solid tenant, listing it to investors may get you more than we can pay, and we will tell you that. If it needs work, here is exactly how we figure out an offer. We work out what the house will be worth once it is fixed up. Our offer lands between 70% and 80% of that number, and that range has to cover both what we pay you and what we spend on the repairs.
If a straight cash offer will not cover what you owe, we can also look at creative financing, where we buy the house on terms instead of paying all cash up front.
No repairs, no commissions, and we pay all the closing costs. We can usually close in 10 to 14 days. Here is how the closing process works.
We buy across Hampton Roads: Virginia Beach, Norfolk, Chesapeake, Portsmouth, Suffolk, Hampton and Newport News.
Common Questions About Selling a House With Tenants in Virginia
Can I sell my house if I have tenants in Virginia?
Yes. The lease usually transfers to the new owner, and the tenant can stay until it ends.
Do tenants have to leave when a house is sold?
Not right away. A tenant with a lease can usually stay until it ends. A month-to-month tenant can be given written notice at least 30 days before the next rent due date.
Can I show my rental while the tenant lives there?
Yes, with reasonable notice. Check your lease for any rules about showings.
What happens to the security deposit when I sell?
It is transferred to the new owner at closing, and they become responsible for returning it when the tenant moves out.
Is it better to sell a rental with or without tenants?
It depends. An empty house appeals to more buyers. A house with a good, paying tenant appeals to investors and keeps rent coming in while you sell.
Sell Your Rental House for Cash, Tenants and All
Call us at (757) 337-2236. We will look at the house and the lease, give you a number within 24 hours, and tell you straight if another option would get you more.