Real Estate

Selling tenanted property

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  • Aug 31st, 2021 3:11 pm
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Sep 9, 2007
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Selling tenanted property

Need to sell a tenanted property and I'm 99% sure the tenant won't give us an easy ride on this one. Just curious, how many people these days buy 1M properties as an investment and do not move in? Perhaps one of the options would be to accept offers only from people looking to buy as an investment and have a new lease done with the tenant? However, if the owner decides to move in there would be nothing from stopping them evicting the tenant. What's the best course of action here?(Mississauga, On)
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Mar 2, 2017
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LembergMX wrote: Need to sell a tenanted property and I'm 99% sure the tenant won't give us an easy ride on this one. Just curious, how many people these days buy 1M properties as an investment and do not move in? Perhaps one of the options would be to accept offers only from people looking to buy as an investment and have a new lease done with the tenant? However, if the owner decides to move in there would be nothing from stopping them evicting the tenant. What's the best course of action here?(Mississauga, On)
Been there done it, there are always buyers out there willing to take on the risk, be prepared to sell the place at a discount if you have a problem tenant paying below market rent.

There are definitely buyers out there for this type of thing, it will be costly. Should only be done as a last resort imo.
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Feb 29, 2008
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Tarrana & The Ri…
RichmondCA wrote: Been there done it, there are always buyers out there willing to take on the risk, be prepared to sell the place at a discount if you have a problem tenant paying below market rent.

There are definitely buyers out there for this type of thing, it will be costly. Should only be done as a last resort imo.
“I’m selling the condo and will be renovating it. You will need to vacate. Here’s some money to go away”. Personally would never sell a tenanted property unless they were grade A tenant paying at or above market rent.
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Yep, I'd be more than happy to write them a cheque for a few months rent to give me the freedom to get top dollar.
Last edited by RichmondCA on Aug 31st, 2021 10:07 am, edited 1 time in total.
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LembergMX wrote: Need to sell a tenanted property and I'm 99% sure the tenant won't give us an easy ride on this one. Just curious, how many people these days buy 1M properties as an investment and do not move in? Perhaps one of the options would be to accept offers only from people looking to buy as an investment and have a new lease done with the tenant? However, if the owner decides to move in there would be nothing from stopping them evicting the tenant. What's the best course of action here?(Mississauga, On)
You can't force the tenant to sign a new lease, even if it's a new owner. They have the right to stay month-to-month as they currently are for as long as they want.

When selling, if the new owner wants for personal use they can make a declaration as such, and you can serve the tenant with an N12 to evict them before the closing date. Of course if tenant is a problem and challenges it with the LTB, it could be many months before they are actually evicted which could complicate the closing date of sale. You would have to ensure the terms in sale agreement protect for this.

If new owner takes the tenant as an investment property but later decides to move in, they can go through the N12 process themselves. But nobody would actually want to go through with this. Most new owners will want (and may pay much more) for a vacant property.

As mentioned above getting the tenant to just leave voluntarily by giving them a sizeable cash incentive, and selling a vacant property, will most likely net you a much higher sell price and remove many potential headaches when selling.
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Sep 20, 2015
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"As mentioned above getting the tenant to just leave voluntarily by giving them a sizeable cash incentive"
Just curious - What is the actual amount for this sizeable cash incentive? What most folks think would work - I know it all depends on the tenant?
Last edited by OttawaGuy2 on Aug 31st, 2021 12:56 pm, edited 1 time in total.
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OttawaGuy2 wrote: "As mentioned above getting the tenant to just leave voluntarily by giving them a sizeable cash incentive"
Just curious - What is the actual amount is for this sizeable cash incentive? What most folks think would work - I know it all depends on the tenant?
It does entirely depend on the tenant and if they know their rights and what the situation is in selling a tenanted vs vacant property.

I would offer something like 3 months rent upon vacating, and see how they respond. Perhaps weight it so they get offered more the quicker they can move out.

If the tenant becomes unreasonable with their demand then ultimately the owner can sell tenanted and tenant may end up evicted with an N12 and just 1 months rent compensation. Every situation though is completely different.
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Jul 3, 2011
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LembergMX wrote: What's the best course of action here?(Mississauga, On)
Speak with them in person, tell them that you owe it to them to let them know that you will be listing the property for sale on X day and how it can impact them:

1) that it is possible the new owner may want the property as an investment and keep them as a tenant. It is also possible they want want it for their own use.

2) if the new owner wants it for personal use, I'll be required by the tenancy act to give you 60 days notice to vacate, and a month's rent in compensation upon vacating.

3) Since 60 days notice to you might leave you in a tight spot to find a place and you'd like to leave either before I put the property up for rent or within 30 days I am happy to consider compensating you with a little more than the one month's rent to make that move a little easier on you. Please think about it and let me know in email by X day if you will stay or terminate our tenancy agreement, the date you would like to terminate the agreement and the amount of compensation. I'll hold off having my agent through the property until X day provided that I either know you're staying or we have a mutual agreement to your termination date and the amount of compensation.

Doing it this way does a few things, it empowers the tenant, places the onus on them to decide what they wish to do rather than being told what they will do, shows them respect, places the full decision on them without coercion, allows for them via their paper trail response to let you know up front if you're going to be dealing with a difficult tenant, and could even save you not just some money if by chance they don't ask for what you would offer, it also sets the tone for what comes next.

If they prove unreasonable or difficult here then you know how to handle them strictly to the letter of the law going forward and hire a realtor who knows what they're doing.
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Dec 5, 2006
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I don't have house to rent out, so please forgive my stupid question: why tenant pay below market renting price hurt property sales

Thanks
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rob444 wrote: It does entirely depend on the tenant and if they know their rights and what the situation is in selling a tenanted vs vacant property.

I would offer something like 3 months rent upon vacating, and see how they respond. Perhaps weight it so they get offered more the quicker they can move out.

If the tenant becomes unreasonable with their demand then ultimately the owner can sell tenanted and tenant may end up evicted with an N12 and just 1 months rent compensation. Every situation though is completely different.
The number will depend on the relationship/how they've been/tenure in the property.
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smartie wrote: I don't have house to rent out, so please forgive my stupid question: why tenant pay below market renting price hurt property sales

Thanks
If the new owner intends to rent the property out, legally they can't evict the current tenant. Which means the new owner will have to allow the current tenant to live there indefinitely, paying below market price rent. Would you pay full price for a property knowing you're locked into losing $500 (as an example) per month compared to market value rent? Most likely, you'd try to negotiate a lower purchase price to make up for that shortfall, which means the landlord/seller will take a hit.

C
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Dec 3, 2018
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Are the tenants still on a lease, or are they month-to-month? If they are month to month upon the sale of the home they would be served an N12 and would have to move out - they can drag this out for months by trying to go to the LTB, but they will eventually have to leave. If they are still on a fixed lease, they cannot be evicted until the end of the lease, so you could either time your sale to be at the end of the lease or try to come to an agreement with them on what it would take for them to leave. I've seen tenants say they will not break the lease early unless they were paid $40k, so be prepared. If you are planning on selling such that the new buyers have to assume the tenants, you can expect to either not get a sale or to be offering a very hefty discount.
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evadav wrote: Are the tenants still on a lease, or are they month-to-month? If they are month to month upon the sale of the home they would be served an N12 and would have to move out - they can drag this out for months by trying to go to the LTB, but they will eventually have to leave. If they are still on a fixed lease, they cannot be evicted until the end of the lease, so you could either time your sale to be at the end of the lease or try to come to an agreement with them on what it would take for them to leave. I've seen tenants say they will not break the lease early unless they were paid $40k, so be prepared. If you are planning on selling such that the new buyers have to assume the tenants, you can expect to either not get a sale or to be offering a very hefty discount.
Yeah and I can see that. If I were asked to move voluntarily before I had kids I'd take a few months' worth of rent. Moving now is a huge hassle so if you want me to move voluntarily it would take a lot more. Obviously this means taking a chance because if the sale is to someone who wants it for personal use I'd have to move and get nothing on top of the one month.

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