What happens to the tenants of a rental property which gets sold?

We’ve managed quite a number of deals which have involved rental properties, often times where the tenant isn’t even aware that something is going on.

For example, in 2021 we purchased a property which was going to auction and then discovered that the home had a rental tenant (who had no clue his landlord was having problems, or that the home went to auction).

In that case, we were able to help him find a new home, and fortunately, all was well.

The truth of the matter is, most people who buy properties aren’t going out of their way to make sure rental tenants are going to be fine.

We do.

In Late 2021, we were contacted by a lady who owned two rental properties in West Palm Beach.

She was trying to take advantage of a 1031 exchange, to essentially move her investment from the rental properties into something different.

But, she was concerned for her tenants.

She didn’t want them to end up without a home.

This was our solution for her.

First, we actually agreed to purchase her properties, sight unseen (aside from a few photos). We don’t normally do this, but if the situation works for us, we can do this (in this case it made her timeline work out well).

Second, and most importantly, we agreed to purchase the homes with the tenants in place.


We guaranteed that her tenants would not end up without a roof over their heads.

How do we do this?

We have two typical approaches to this kind of situation to make sure tenants end up with a home.

First, we offer tenants the opportunity time, and assistance to find and move to a new place if they wish.

Sometimes this is the only option, if for example, we need to make significant repairs or changes to the property before reselling it, or if we have to resell it as a regular property, not a rental property.

Second, if we are able, and the tenants don’t want to move, we can sometimes remarket the property as a “ready to go” rental property. Where the buyer is getting a rental property with a reliable tenant in place (some people find this very appealing as it solves one of the biggest headaches in managing rentals).

In either case, we always make sure tenants end up with a good home … we never do business in a way which will just kick a tenant out with little resources or hope.

In this story, the tenants also had no lease agreement, which would have put them at significant risk in dealing with a typical real estate buyer (who could have just kicked them out). However, we were able to find good solutions for all involved.

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