I know what you mean. I recently bought a vacation condo with a long-time tenant, and required that it be delivered vacant. I felt guilty about booting the tenant out, having been in a similar situation myself as a renter years ago. The tenant was also gracious and polite when we viewed the unit, which I appreciated.

Turns out that our realtor had a lower-priced rental listing in the same town. He showed it to the tenant, who we were told was "very happy" about taking it. I didn't really believe that until we took possession of our condo and realized that the toilet and kitchen sink did not work. At all.

We're gutting the place and knew it was an as-is distress sale, so we didn't care. But I don't know how that guy was managing to live there with only one functioning plumbing fixture (the bathtub). I think the bathtub was being used for other things, if you know what I mean.

So now he's living in a place with a fully functioning bathroom and kitchen, and paying less rent. There can be a happy ending for displaced tenants.

If the tenant has signed a one year lease and it has not expired, you can't expect to kick them out just because ownership has changed.

I wish you had read my whole post, marvin.

I'd rather this not turn into a thread about the renter's legal rights and the difficulties/ways of getting them out before or after closing. There are a couple threads about those topics already. I know those issues can present their own difficulties but mainly what I'm interested in knowing is does a rental property being sold usually result in the tenants being displaced? Would buying a house for our own family use not be an outlier in that sense?

Thanks.

One cannot answer your question, "does a rental property being sold usually result in the tenants being displaced?" without addressing the legal issues. The legal lease will dictate when/how/if the tenant will be displaced.

I fully understand for you that this maybe an ethical issue. A renter should know that no matter the length of the tenancy, the possibility of being asked to leave always exists.

Also when you post on a public forum, you can try to dictate the terms of responses, but one can respond in whatever way they desire, just as you posted what you wanted to post.

QUESTION: "mainly what I'm interested in knowing is does a rental property being sold usually result in the tenants being displaced? "

ANSWER: Tenants will not be displaced until their lease expires or
if their lease alread expired and they are on month-to-month lease, until they are given proper notice to move,which is usually 30 days but depends on the state.

You risk buying a home with 9 months still on the lease. In this case, you are going to be a landlord for 9 months. Then you are going to be the one that is displaced, since you won't be able to live in the home you just bought.

Usually if an investor is selling a single-family property they will pick one where the tenant is on a month-to-month lease, and it's a tenant they don't mind losing. If they want to keep the tenant but it's the most salable property, they boot an undesirable from somewhere else and offer the vacancy to the good tenant.

A good investor will notify the tenants that the place is listed, clarify what happens during showings, and tell them they should start looking for new digs, or figure out how to buy where they are living.

Then, with the usual 30-60 day closing period, the tenant has the proper legal notice and the house can be delivered empty at closing.

==========
If the investor sells a house where the tenant is not month-to-month, they hand over the leases and the security deposits to the new owner at closing. The new owner has to deal with the lease as it was written, and at the end of the lease can have the tenant move out.

You cannot - as happened to a friend of mine because of bad information given the buyer by the seller who concealed the existence of the lease!) - buy a house where there is a tenant in month three of a 1-year lease and order them to move out. They do not have to go, in most states.

yes, it's wierd to buy and sell people's lives like that, but it happens.

I think more people have been renting out single family homes in the past few years, because they needed to move and couldn't sell the house. So there are more tenants in more single family homes than there were 10 years ago.

And most of these homes could be either investment properties or the new owner's home. Or they could be purchased with the intent to flip the house.

Tenants have various protections depending on the state where they live. I would not let the presence of a tenant stop me from buying a house, unless I needed to move into the house before the tenant's lease was up.

And remember, there's what the law says you have to do for the tenant. You can be more generous than the law requires, so if the law requires you to give the tenants 30 days notice, you can always give them 60 or 90 days, if it makes you feel better.

" what I'm interested in knowing is does a rental property being sold usually result in the tenants being displaced?"

As everyone is trying to tell you, it has everything to do with te renter's legal rights under the rental contract.

If they are month to month they can be given notice.

If they are on an annual contract it has to run out.

The lease is NOT altered by the sale.

Its terms continue to bind the new owner.

You are purchasing 'subject to' the terms of the existing lease.

You need to have a DETAILED discussion with your attorney.

This post was edited by brickeyee on Sun, Jun 16, 13 at 11:51

" what I'm interested in knowing is does a rental property being sold usually result in the tenants being displaced?"

I'm interpreting your question a little differently:

Are rental properties usually bought with the intent of continuing as a rental property, or to become the new owner's primary residence?

Is that what you meant to ask?

'The lease is NOT altered by the sale.

Its terms continue to bind the new owner.'

so you may not have to feel bad about booting them out after all!

The lease issue also depends on where you live. We have very, very strong tenant protections where I am--but a new owner occupying a property is one of the few situations in which a lease can be legally terminated (with proper notice, but that shouldn't be an issue given the time it takes to close). It is only an exception for owners who want to live there, which I think highlights the fact that yes, this is fundamentally different from a new investor owner who might just want to boot a tenant for more rent or what-have-you. I wouldn't stress too much about it, but I would also find out what you can about the current tenants and the situation. Many, many homes in our area were rented out if people moved before the recent market upswing; usually people try to sell them empty, but if they can't risk a lapse in payments, they sometimes still have tenants, so a rental may not even necessarily be an investment property.

I might avoid the "long-term tenant wants to stay" places just for my own peace of mind, though.

" what I'm interested in knowing is does a rental property being sold usually result in the tenants being displaced?"

It depends on who's buying the property and why. Are you asking how often people will buy a property with a tenant and want to move in themselves?

Probably nobody knows the answer to that. If you are concerned, both for ethical but also for legal/personal reasons, (i.e. whether you can get the tenant out), try to find out what the tenant's intentions are. You can then evaluate whether it's something that you can deal with.
I mean there are all kinds of possible scenarios, ranging from a tenant, for whom it would be a terrible hardship and make you feel horrible, to a tenant who's ok with moving or was perhaps told that the house may be sold. Also, how important is it for you to find a house that you like and can afford?
Are you thinking about a specific property? Is the tenant cooperating? Or is this just a thinking-ahead in general terms?

I'm interpreting your question a little differently:

Are rental properties usually bought with the intent of continuing as a rental property, or to become the new owner's primary residence?

Is that what you meant to ask?

Yes! Thank you! I understand that the last thing we want to do is buy a house with tenants who have months remaining on the lease, and we want to look at the lease before we make an offer. I'm a renter, for heavensake, I know what rights renters have in my state.

I want to know: do most of these "investor's specials" actually get bought by people who want to be landlords, or do they usually get bought by people who want to inhabit/flip the property?

AND, when they ARE bought by investors who want to be landlords, do those investors usually want to keep the current tenants (as I had imagined) or do they usually empty the property and start fresh?

Nosoccermom: I'm just thinking ahead in general terms. Ethically I need to decide whether I'm okay with looking at properties with renters at all (there are a few generally possible-looking ones we've come across) and then of course I need to look at each specific property for the specific tenants and lease involved.

It's very important that we find a house we like and can afford because this will be our family's new (only) home -- we've been living in a place we hate for years and are overjoyed to be able to move.

"AND, when they ARE bought by investors who want to be landlords, do those investors usually want to keep the current tenants (as I had imagined) or do they usually empty the property and start fresh?"

Hi, OP. I'm an investor. Other people's tenants are a nightmare. I get rid of them as soon as possible and choose my own. I generally buy fixer-uppers and begin the remodels/improvements the moment the lease is up. I make my properties GORGEOUS. Then I can be as picky as I want with prospective tenants. I absolutely prefer to choose my own tenants. Good luck.

Thanks, oklahomarose!

Out of curiosity, does the thinking go "I know exactly what standards I apply to MY tenants but have no idea what standards other landlords have if any?"

And/or "If they were really great tenants, the landlord would have moved/retained them in some way"?

AND, when they ARE bought by investors who want to be landlords, do those investors usually want to keep the current tenants (as I had imagined) or do they usually empty the property and start fresh?

It depends on the tenants ... I managed my sister's rentals for several years, and it was about 50-50 between keeping and booting tenants from properties that were rented when she bought them. Drug dealers and prostitutes were booted ASAP, unless the cops had them under surveillance. I found that just scheduling repairs and getting contractors in for estimates made a certain class of tenant flee like a cockroach.

If the tenants had a good payment record, good housekeeping practices and the residence had no problems that needed an empty building to fix, we kept them. A couple of good tenants were in buildings that needed too much work - we did some creative shuffling if it was possible and they moved out and back in after the repairs if they wanted to.

I gave some the choice of staying through some invasive and inconvenient repairs (roofing, plumbing, flooring, etc.) ... and warned them that improvements, as opposed to repairs, meant rent increases. Were they willing to pay X more a month for the whatever they asked for?

Just another point of view. I owned a long-term rental (13 years) and several times had people call us up and ask us if we were willing to sell. I told them that when we were interested in selling, we would offer it to our tenant first. And he ended up initiating the purchase of the townhome. Yes, it was an investment property, for which we made a 1031 exchange for a property closer to home. We are interested in a long-term investment rather than a quick flip, but we're probably odd in the investment world.

When I bought investment property, I would have liked to keep the current tenant. However, he had already committed to another place (with a room mate), so we negotiated when he would move out. He allowed me to do some minor renovations in exchange for a rent discount.

As it turns out, our agent has a great way of dealing with the issue. When we see a house that has tenants, she introduces us: "This is Kristin_c and Mister Kristin_c. They're concerned about you having to move if they buy this house. Were you already planning on moving?"

So far, all of them have said that they were in the process of finding another place (presumably because of the uncertainty of the whole selling situation, although it seemed prying to ask).

Of course, we're still avoiding the "long term tenant wishes to stay" houses, but for the rest, it's eased my mind significantly.