Hello and thank you.
My client has a MCOL rental in CO, that they need to sell as soon as they can. The tenant has 2.5 years remaining on their lease. The tenant has been asked if they want to purchase the home but it doesn't look like they would qualify. The listing will sell better without a long term tenant so my client is prepared to offer cash for keys to vacate the renter. With the 2.5 year lease what is an appropriate offer to make? Thanks!
Should client offer cash for keys? need to sell ASAP, tenant has 2.5 yrs remaining on lease
byu/greenride1 inRealEstate
Posted by greenride1
12 Comments
Why did the owner agree to such a long leasing term if they were planning on selling?
If they need to sell fast cash for keys is absolutely your best choice.
Can you also help them find a new rental?
Probably depends on how good of a deal they have on the rent. If it was pretty normal for the area I would probably want one year worth of market rent for a similar place. If I was paying under market value I’d probably just want to stay or it’d take a lot to get me bought out.
Cash for keys is what I would do.
That sounds like cash for keys is the trick. I would offer the equivalent of 3 to 4 months of rent in my market.
Starting point?
Moving costs, any incremental additional cost for the new lease, and some extra amount of money for their inconvenience.
To determine what a good offer is you would need to know two things, at least. First, how good a deal does the person have on their rent? Are they paying market rates or do they have “a great deal.” The better the rental rate, the more you would need to offer.
Second, how soon do you want them out? The sooner, the more you will need to pay.
I would waive all deposits and damage fees and then offer 3 months rent if they are paying market rent. Maybe 4 to 6 if they have a great deal. I would expect to give them 3 months to move out, at least.
How much goodwill does your client have with the tenant? Are they on good terms, neutral at least, all things considered? That matters a lot here.
I just did this this month. She had 6 months left but my buyer wanted empty. I paid my tenant 7k to leave. Worth it. Closed on Monday
Not knowing any of the financial or personal details, I am just throwing out an uninformed guess.
I would offer 6 months rent plus return the deposit and be prepared to go up to from there. The tenant is faced with a lot of unexpected costs which can be expremely inconvenient. If the rent is very low, take into consideration the cost to move, to pay another lease deposit, and to make all the additional adjustments. The tenant was led to believe the current rent would be constant, so he will probably also experience sticker shock. It’s going to be a tough sell probably.
Side Q: Is a 2.5+ year lease normal in your area? Seems like a crazy long time to lock in…
I would start by saying – we will let you out of the lease and offer the entire deposit back as long as the unit is in reasonable condition and if you can be out by this month we will return this months rent. Then work you way up if they hard ball you. Most people are very non confrontational and do not see the opportunity to negotiate.