When buying an investment property, there may be a time in the future where you want to sell it. Sometimes you may be selling an investment property with a tenant living in it.
However, it can be more difficult selling an investment property with a tenant living in it. Keeping the home presentable by reducing clutter, maintaining the landscaping and having the property clean are all out of your control if a tenant is occupying it.
Here we discuss the option of asking your tenant to vacate in preparation to sell or to look at ideas to improve your sales campaign when selling an investment property with a tenant living in it.
Look if you can end the lease agreement with your tenant
Careful consideration needs to go into understanding the laws and regulations in respecting your tenantโs livelihood. In some situations, the lease agreement may have expired, meaning the tenant is paying their rent on a month-by-month arrangement. Giving tenants appropriate time to leave and find a new home is also a legal requirement to adhere to.
In general terms, you are not permitted to evict a tenant when selling an investment property. If the property is going to be disadvantaged selling, particularly in a suburb heavily occupied by owner-occupiers, you may want to communicate to your tenant in advance. If your tenant is satisfied living in the property, you could offer to:
- Sell the property to your tenant โ This can be a prompt way to sell. It can also be a cheaper alternative without the need to pay real estate agent fees. You can also offer to sell the home a little cheaper knowing you have no real estate agent fees. This may be a win-win situation for both yourself and your tenant.
- Provide the tenant with extended time to move โ This may have a tenant feel more inclined to make the effort to move and break their lease for you.
- Offer to pay for their furniture to be moved โ Moving homes can be the biggest problem for many looking to find a place to live. Perhaps offering to pay a furniture removalist will motivate your tenant to leave.
- Offer a cash incentive โ Proving the tenant with a cash incentive may have your tenant agree to move out.
- Provide the last month rent free โ Providing the tenant with a rent-free month, may have them agree to move out earlier.
Work with your property manger
Discuss the situation with your property manager. Property managers will have a clear understanding of the legal ramifications and can guide you accordingly. In these situations, your property manager will really show case their skills and quality service.
They will know your tenant quite well and may be able to share some insight or feedback into their reaction of you selling. Your property manager may also have other properties to offer them which may also help motivate the tenant to leave. Close communication with your property manager and tenant is essential. If you are unable to keep contact, it will generally be much harder to sell.
Open inspections are very helpful when selling a property. As your tenant is occupying the home, you may want to discuss establishing some days/times that the tenant is satisfied for your sales agent to conduct open inspections. By establishing set days/times, the better your chances the tenant will cooperate with keeping the property clean and tidy. The more presentable the homes, the better chance of selling.
Please note, that the tenant has their own personal contents in the home. If the tenant is concerned about their privacy and security of belongings, make sure the selling agent takes further care. They can take photos of identification and ensure they have all contact details of each person attending the open for inspection.
If you are not getting the tenants cooperation, you may want to consider:
- Offering them a reduced rent โ This may motivate the tenant to keep the home looking clean in preparation for the open inception.
- Offering to write a good reference so they can find their next property easier and promptly.
- Providing a gift โ A kind gesture is gifting them something for their efforts to support you in advance. It may be a bunch of flowers, a basket of goodies, a bottle of wine etc.
- Paying for a professional cleaner โ Most people will appreciate a professional clean. A tenant will be very happy to have the home cleaned for them. It may also have your tenant feel more obliged to keep the property cleaner at all times.
- Buy a light incense or wax melt โ This will help the property smell good while selling your property. The tenant may appreciate the gift at the same time.
- Pay for a gardener โ Many tenants donโt have the time to fully keep your gardens looking spectacular. This is why a low maintenance garden suits an investment property. Nevertheless, paying for a gardener to regularly cut the grass and maintain the gardens during the sales campaign would also be a warm welcome to your tenant. The tenant will have more time or save money. Meanwhile, you are presenting the investment property to a higher standard.
In summary
These tips should help you โthink outside the boxโ. If you have a great tenant, they may be happy to leave so you can prepare the property for sale. If they are reluctant to leave, some of the above tips may help.
When selling a property with a tenant living in it, always remind yourself. It is your investment, but it is your tenantโs home.
If you’d like to learn more, please don’t hesitate to contact us.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us.ย We welcome the opportunity to assist you.
December 2020
