Communication is the key to achieving a good result when you need to sell an investment property with tenants
If you are planning on selling an investment property, one of the key considerations will be whether you do it when it is tenanted or vacant.
There are plenty of reasons why selling a vacant home may be favourable.
Selling it with a tenancy in place limits its appeal, particularly with homebuyers who may wish to move in as soon as possible.
Of course, on the flipside, if your property is likely to appeal to investors, the fact that it is tenanted might actually be a selling point.
Another disadvantage of selling a tenanted property is that you’ll have less control over how the home is presented during the sales campaign.
But selling a vacant property also means there will be a period of time when you won’t be earning a rental income, which may not be financially feasible.
Angus Raine, chairman of Raine and Horne, advises keeping the tenant in place and working closely with your agent to achieve the best outcome in the shortest time possible.
The first step is to talk to the tenant and let them know of your intention to sell. Depending on your relationship you can deal directly with your tenant or you may prefer to have the managing agent do this.
Don’t be surprised if your tenant asks to leave when they find out that you want to sell.
In some states they may be able to end their agreement, even if they are on a fixed-term lease, if you hadn’t told them about your intention to sell before they signed the lease.
If you would prefer them to stay and you want to present the property in its best light then you could offer them an incentive.
This might be discounted rent during the sales campaign or maybe you can pay for a cleaner to come in each week before the open for inspections. Have a chat to come up with something that works for both of you.
You may also have to get permission from the tenant to take photos of the inside of the property.
The tenants should keep the house in a reasonable condition overall but are not obliged to do anything extra. You could offer to have someone mow the lawns and weed the garden at your expense before the photos are taken.
Tenants must allow your real estate agent to show potential buyers through the property as long as you have given them sufficient notice.
Find out exactly what the notice period is. The number of inspections each week has to be reasonable. In Victoria, for example, tenants don’t have to agree to any more than two showings a week.
Communication is key, as is being considerate of your tenants and understanding that the process can be difficult for them.