Selling an investment property while your tenants are still living there often makes financial sense. Having rental income right up until you sell the property can make a big difference to your budget, especially if you need to make loan repayments. Other investors often prefer to purchase a property that has reliable tenants in it and, in some cases, can help push the sale over the line.
Your tenants are likely to be happier too, as it can save them an unnecessary move which is both costly and time-consuming. Here are six tips for navigating the sale of a tenanted investment property:
1. Open Communication
Let your tenants know you are going to sell the property BEFORE you put the property on the market. Many tenants love their 'home' and in many cases, if they are in a financial position to do so, may like to buy your property. Make sure you talk to your property manager
about your specific State legislation regarding notification periods.
2. Open homes and inspections
In most states and territories, written notice must be provided to the tenants at least 24 hours before the property will be shown to a potential buyer. To make it easier for tenants, it is a good idea to organise two set times per week for open home viewings. This gives
tenants enough time to tidy up the property and make plans if possible to be out of the premises.
3. Offer incentives to tenants
Selling a tenanted property means you have less control over how it is presented. One way around this is to provide incentives to keep the property looking good.
This could include:
Taking $50-$100 off the weekly rent in return for keeping the place tidy
Consider offering a week’s free when the property is to combat possible relocation costs
Paying a small fee for open inspections
Providing a reference for their future rental property applications.
4. Offer the chance to break the lease
It may be better to offer tenants an early release from the property. Remember, if your tenants are on a fixed term lease you cannot ask them to leave unless they choose to break the lease themselves. Your property may be able to negotiate or suggest suitable incentives in this situation.
5. Pay for clean-up
Hiring a cleaner and gardener (if you have an outside space) will be well appreciated by tenants. It means they don’t have to do a deep clean but simply maintain the property in a neat state before any open inspections.
6. Get professional help
A professional real estate agent or your dedicated property manager can help you when selling a rented property. They can provide you with a guide to selling a tenanted property and the steps to take to ensure you comply with any local and federal laws
regarding such a sale.
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