Investing in Detroit real estate can be lucrative, but it is not for the faint of heart. For every passive income success story, there is a “tired landlord” story—someone burned out by late night maintenance calls, changing regulations, and the relentless chase for rent checks.
At some point, the Return on Investment (ROI) is no longer worth the Return on Hassle (ROH). You might be ready to retire, move out of state, or simply reallocate your capital into a more passive investment. But selling a rental property is more complex than selling a primary residence, especially if the unit is occupied.
Do you evict the tenants first? Do you try to sell it with them in place? How do you handle security deposits? These are critical questions. Speedy Sale Home Buyers specializes in helping landlords transition out of their portfolios smoothly. This guide explores how to sell your rental property without the legal headaches. For a broader view of all selling scenarios, don’t miss our Ultimate Guide to Selling a House for Cash in Detroit.
When the Rent Stops Coming
The most common reason landlords contact us is non-performing assets. A tenant has stopped paying, the moratoriums have confused the legal landscape, or the eviction courts are backed up. You are stuck paying the mortgage, taxes, and insurance, while the asset generates zero revenue.
Eviction in Michigan is a legal process that requires strict adherence to notification timelines. If you make a mistake in the paperwork—like serving a 7-day notice when a 30-day notice was required—the judge can throw out your case, and you have to start over. Meanwhile, you are losing money every single day.
Selling the property to a cash buyer can resolve this instantly. Investors buy the property and the lease (or lack thereof). We step into your shoes as the landlord. We handle the eviction or the “cash for keys” negotiation after the closing. You stop the financial bleeding immediately. You walk away with your cash, and the tenant problem becomes our problem.
Michigan Tenant Rights During a Sale
If you have good tenants, you might be worried about disturbing them. It is important to know that in Michigan, the lease survives the sale. If your tenant is on a fixed-term lease that ends in six months, the new buyer must honor that lease for six months. You cannot just kick them out because you want to sell.
This makes selling to an owner-occupant (someone who wants to live there) very difficult. They want to move in upon closing. If the tenant has a lease, the buyer can’t move in. This limits your buyer pool significantly.
However, this is perfect for investor buyers. At Speedy Sale Home Buyers, we love properties that are already generating income. We don’t view tenants as an obstacle; we view them as an asset (assuming they are paying!). We can close the sale without displacing the tenant, ensuring a smooth transition where the only thing that changes for them is where they send the check.
Transferring Leases and Security Deposits
The logistics of selling an occupied rental require attention to detail. At the closing table, any security deposits you are holding must be transferred to the new owner. You cannot keep the deposit; it belongs to the tenant.
You also need to provide the “estoppel letters” or lease agreements to the buyer. This confirms what the rent is, who owns the appliances, and if there are any side agreements (like “I mow the lawn for $50 off rent”).
When you sell to a professional home buying company, we handle this paperwork coordination with the title company. We ensure the proration of rents is calculated to the day. If you close on the 15th, you keep half the rent, and we get the other half. We make sure the legal transfer protects you from future liability regarding that tenant.
Selling a Vacant vs. Occupied Rental
Is it better to sell vacant? Generally, yes, if you are targeting the open retail market. A vacant home is easier to stage, easier to show, and appeals to regular homebuyers.
However, achieving vacancy costs money. You lose rental income during the vacancy. You have to pay for utilities. And you run the risk of vandalism—a vacant home in certain Detroit neighborhoods can be a target for scrappers stripping copper or squatters moving in.
Selling occupied to an investor eliminates the vacancy risk. The property remains secure because someone is living there. The utilities stay on in the tenant’s name. You maintain cash flow right up until the day of closing. For many Detroit landlords, this security outweighs the potential (but not guaranteed) higher price of a vacant retail sale.
Calculating Your ROI: Holding vs. Cashing Out
Ultimately, the decision comes down to math. Look at your “Cap Rate” (Capitalization Rate). If your property is worth $100,000 and nets you $6,000 a year, that’s a 6% return.
Now, consider the equity. If you sold that house for $100,000 cash, could you invest that money elsewhere for a better return with less work? Could you pay off high-interest debt?
Many landlords find that their “return on equity” is actually quite low once they factor in their own time managing the property. Selling allows you to unlock that “dead equity” and deploy it into something that serves your life better today—whether that’s a retirement fund, a vacation home, or a completely different business venture.
If you are ready to hang up your landlord hat, we are ready to buy. To see how tenant-occupied sales fit into our overall process, read the Ultimate Guide to Selling a House for Cash in Detroit.