Selling a Rental or Tenant-Occupied Home Along the NC Coast

0:00Welcome to Real Stories with Buddy Blake. Today's episode features real estate insights from Buddy Blake. Let's dive in. So today, we're talking about something I feel like doesn't get talked about enough, selling a rental property or like a beach house you've been renting out.

0:21Buddy Blake is here to walk us through it. Buddy, thanks for coming on. Yeah, happy to be here. This is honestly one of those calls I get all the time.

0:30Somebody's got a rental in Wilmington or a place at the beach they've been doing Airbnb on or renting long-term and they're ready to sell. And I bet the first thing people ask is like, okay, what's this worth? You'd think, right?

0:45But no, it's almost never price. First question is always, what do I do about the tenant? That's the thing on everyone's mind. Huh, that's interesting.

0:56So is selling a rental actually harder than selling like your regular house you live in? Not harder, just different. There's more moving parts and honestly, most of those decisions need to get made before you list, not after.

1:11That's the big mistake I see. Okay, so walk me through it. What's the first decision somebody's got to make? First fork in the road is, do you sell with the tenant still living there or do you wait for the lease to end and sell it vacant?

1:27Selling occupied, that usually means you're selling to another investor who wants that rent to keep coming in. Selling vacant opens it up to families, regular buyers looking for their own home. So which one's better?

1:40Honestly, there's no universal right answer. Selling occupied means a narrower buyer pool, which can affect your price and how long it takes. Selling vacant, you get more buyers, but you're giving up rent during that gap and you might have repairs to do once the tenant's out that you couldn't touch while they were living there.

2:00Right, because you can't exactly rip up the flooring while somebody's still living on it. Exactly. So it really depends on the property, how much lease terms left, what the demand looks like and how much lost rent you can actually absorb.

2:14I walk through both scenarios with real numbers before anybody decides anything. Okay, so once you've picked a direction, what's next? I imagine there's a tenant involved in all this who has, you know, opinions. First thing I do before the rental even goes on the market, I want to see the lease.

2:33What's it say about notice for showings? Does it say what happens if the property sells? Does the lease carry over to the new owner or end at closing? Those sound like lawyer questions, not real estate questions.

2:47They are. I'm not a lawyer and I'm not going to pretend to be one. That's exactly why I have my sellers talk with a real estate attorney before we list a tenant-occupied property.

2:58My team includes an hour with one as part of how we work together. Get the lease term straight first. It saves you headaches with the tenant, the buyer and at the closing table later. That makes sense.

3:12Better to know now than get surprised in the middle of a contract. Right. Once the lease is sorted, if the tenant's still living there, showing the place is its own thing.

3:22A lived-in rental shows different than a vacant one. And honestly, the tenant's cooperation matters way more than people expect. How so? A tenant who tidies up before showings, gives reasonable access, doesn't make buyers feel unwelcome, that helps a sale move along.

3:40But a tenant who resents the whole process, they can slow everything down. Or scare buyers off before they even walk through the door. So it's really a relationship thing at that point. It is.

3:54I coordinate showings respectfully, with as much notice as the lease and the tenant need. Good communication with the tenant, early and often. That tends to make or break how smooth this part goes. Okay.

4:08So what about the other path, when the place is actually empty? Is that just easier across the board? It opens up options, yeah. A vacant space photographs kind of oddly empty, though.

4:20So we use virtual staging to help buyers picture furniture, picture the flow of the place, along with professional photos and accurate measurements. Oh, I like that, because an empty room can look so much smaller than it actually is. Totally.

4:36And I also do a pre-market inspection on every listing my team pays for it, before it ever goes live. That matters even more with a rental. Years of tenant turnover means wear and tear an owner living in the home just wouldn't have.

4:51Right. So you're finding out what the buyer's inspector is going to find, before it becomes a mid-contract surprise. Exactly.

4:59Better to know up front, than have it blow up a deal later. Okay. Let's talk taxes for a second, because I feel like that's a whole different animal with a rental.

5:08It is. Selling a home you've lived in, and selling a rental? Not the same conversation when it comes to taxes. I'm not a tax professional.

5:17I won't pretend to give tax advice, but I tell every rental owner the same thing. Talk to your CPA or tax advisor before you sell, not after. Before, not after. That seems like a really important distinction.

5:32It really is. The numbers on an investment property can look very different than a primary residence, and you want that answered ahead of time, not as a surprise next April. What about beach properties, specifically?

5:46Is that a whole different conversation, or does everything you just said still apply? A lot of it applies just the same, whether it's a house in midtown Wilmington, or a place near the water. I've actually written before about Carolina beach homes, used as a primary residence, a weekend place, or a rental, and it's the same questions.

6:08How it's being used now, shapes how we sell it. If somebody's weighing that decision for a place near the beach, that's worth a look before deciding anything. Okay, so once you've worked through all of this, the lease, the tenant, the timing, the tax conversation, what are the actual options at the end?

6:28Really two paths. List the property for top dollar on the open market, with that pre-market inspection, the photos, the staging, all of it, so it shows well to the widest pool of buyers. Or, take a cash offer through my investor partner.

6:44No showings, no repairs, you pick the closing date. But that second one's going to be a lower number, right? Usually below market, yeah, and I'll show you exactly how far below before you decide anything.

6:58You're choosing with real numbers in front of you, not a guess. And I imagine you break that down for people, so they can actually compare? Every offer that comes in, I put together a net sheet, so you can see what actually lands in your pocket after everything's accounted for.

7:15And honestly, if you list and change your mind before you're under contract, you can just walk away. No hard feelings. I love that there's no pressure built into it.

7:27So whether somebody's got a rental in Wilmington, or a place down in Carolina Beach, you're saying the process is basically the same conversation? Same conversation, yeah. I walk through selling in Wilmington, or selling in Carolina Beach, and what the specific lease and tenant situation means for timing and price.

7:46And if the tax side's weighing on somebody, I've got a guide on property taxes along the Wilmington and North Carolina coast. That's a good place to start before talking to a CPA. This was such a helpful rundown, buddy.

7:59If somebody's sitting there right now with a rental or a beach place, trying to figure out what makes sense, what do you want them to do? Just call or text me, 910-395-1000. We'll talk through the lease, the tenant, and the numbers before you decide anything.

8:17And the full article on this is linked in the show notes, if you want to read through it yourself first. Perfect. Buddy, thanks so much for breaking this down.

8:26This is Real Stories with Buddy Blake, and we'll catch you next time. Thanks for listening to Real Stories with Buddy Blake. For the full article and more, check the show notes. See you next time.