How To Sell A Rental Property with Tenants in Memphis

Sell a Rental Property with Tenants in Memphis is often one of the most stressful situations a landlord can face. I’ve spoken to numerous property owners in Shelby County who feel stuck—they want to sell, but they are terrified that their tenants will stop paying rent, damage the property, or refuse to leave once the “For Sale” sign goes up. If you are tired of late-night maintenance calls or chasing down rent checks, you might be wondering if there is an exit strategy that doesn’t involve a messy courtroom battle.

Can I sell a rental property with a tenant?

The quick answer is yes—you absolutely can. In fact, selling a house with tenants in place is very common in Memphis, especially when selling to another investor versus a family looking for a home.

When you are selling a property that is currently under lease, the lease and the security deposit will usually transfer to the new owner. This means that you won’t have to remove the tenant before you sell the property. The biggest problem comes in when you are selling the property to the person you are selling to. If the person is a traditional homebuyer who wants to live in the house, they will not offer to buy a house that is currently under lease or will require it to be vacant at the time of closing.

However, when you sell to a cash home buyer such as Spencer Buys Houses, the process is much simpler. We buy houses as-is and assume the existing lease, so you can sell without having to ask the tenant to vacate.

Is it better to sell with or without tenants?

This really depends on your timeline and your target buyer. If you are trying to get the absolute highest retail price on the MLS (Multiple Listing Service), it is almost always better to sell without tenants. Most retail buyers cannot visualize their furniture in a home when someone else’s clutter is there, and they certainly don’t want the headache of removing a stranger from their new home.

However, if your goal is speed and convenience, or if you have “bad tenants,” it is often better to sell with them. Here is why:

No Loss of Income: You keep collecting rent until the day you close.

No Eviction Costs: Evictions in Shelby County can take months and cost thousands in legal fees and lost rent.

No Rehab Costs: Tenants often leave damage when they are forced out. If you sell with them in place, you sell the house in its current condition and let the new owner handle the repairs later.

For many tired landlords I work with, the “cost” of vacating the property—both in money and stress—isn’t worth the slightly higher price they might get on the open market.

How much notice do landlords need to give tenants?

In Tennessee, if you plan to show the property to prospective buyers, you generally need to give the tenant reasonable notice, which is typically 24 hours, unless your lease states otherwise.

If you are trying to end the lease to sell the house vacant, the notice depends on the lease terms:

• Fixed-Term Lease: You usually cannot terminate the lease early just to sell the property unless there is a specific “early termination due to sale” clause in the contract. You have to wait until the lease expires.
• Month-to-Month Lease: In Tennessee, you are generally required to give a 30-day written notice to terminate a month-to-month tenancy.
  

However, if you sell to Spencer Buys Houses, you don’t need to give a “notice to vacate” at all. Since we are investors, we simply step into your shoes as the new landlord. You avoid the awkward conversation of kicking them out, and we handle the transition.

Why is the traditional listing process difficult with tenants?

Have you ever tried to coordinate a showing with a tenant who doesn’t want to move? It is a nightmare. Tenants have been known to:

• “Forget” to unlock the door for showings.
• Leaving the house messy or smelly will deter buyers.
• Badmouth the property or the neighborhood to anyone who walks through.
  

When you list with a real estate agent, you are asking the tenant to cooperate with a process that ultimately leads to them losing their home. It is natural for them to resist. When you sell directly to a cash home buyer in Memphis, there are no open houses, no parade of strangers walking through your living room, and often, they don’t even need to move immediately.

How can you escape the “Tired Landlord” trap today?

If you are done with the headaches of property management, you don’t have to wait for the lease to end. You don’t have to spend money fixing up the unit, and you certainly don’t have to navigate the Shelby County eviction courts.

At Spencer Buys Houses, we specialize in buying rental property in Memphis—good tenants, bad tenants, or no tenants. I understand the BRRRR strategy and the value of rental portfolios, so I can make you a fair cash offer based on the numbers. We can close in as little as 7 days, or on your timeline, and I’ll handle the lease transfer paperwork.

Frequently Asked Questions (Memphis, TN)

Q: Do I have to pay for my tenant’s moving expenses if I sell?

A: No, under Tennessee law, you are not required to pay for a tenant’s moving expenses if you are ending a lease for legal reasons (such as at the end of the lease term with proper notice). That being said, some landlords will pay “cash for keys” to encourage difficult tenants to move out.

Q: Can I sell a house in Memphis if the tenant has stopped paying rent?

A: Yes. You can sell a house with a non-paying tenant. This is actually a very common reason landlords call me. I can buy the house with the non-paying tenant inside, and I will handle the eviction process after we close, releasing you from that burden immediately.

Q: What happens to the security deposit when I sell?

A: Under Tennessee real estate law, the security deposit is the tenant’s money, held in trust. When you sell the property, that deposit must be transferred to the new owner (the buyer). We handle this transfer on the settlement statement at closing, so you don’t have to write a separate check.

Q: Do I need to clean the house if the tenant leaves it dirty?

A: If you sell to a traditional buyer, yes, you would likely need to deep clean and repair the home. If you sell to Spencer Buys Houses, no. We buy “as-is,” meaning you can leave the clutter, the dirt, and the deferred maintenance for us to deal with.