I often get asked by investors whether they should keep a tenant in a rental property when selling, or if they should sell it as vacant possession. It’s a great question, and as with most things, my answer is usually “it depends”. There are a few variables to consider, so you can make a more informed decision about whether to keep your tenant or give them notice so you can sell the property vacant.
There are a number of questions I like to ask when figuring out what the right approach is.
“How does the tenant keep the property?”
“Is it tidy and well looked after?” If it is, it may be beneficial to keep them in the property.
“Is the property in need of any repairs prior to sale?” If it is, depending on how much work is required, it can often be better to do this once a tenant is out, that way you can fix the issue and ensure no further damage is going to take place. This differs depending on what the repair is.
Following this, I ask “Does the tenant have decent furniture that would allow photos to be taken of the property when it comes time to advertise online?”
If the tenant is someone who has nice furniture and they treat the property like their own, then my answer might be to sell the property with the tenant. For a cash strapped vendor, this is going to make life easier and less stressful.
When to ditch a rental tenant before selling
I recommend ditching your tenant if they have old furniture that doesn’t compliment the space, or if they don’t clean your property before inspections. Doing this gives you the opportunity to clean your home and prepare it for sale. You only get one first impression on potential buyers, so make the most of it.
The ultimate goal of selling a property is to get as much for it as possible. In order to do this, you need to present your property in a way that’ll appeal to most buyers. This includes cleaning it, doing any minor repairs, and even giving the space a fresh paint job. For more information on how to prepare your home for sale, see my previous blog post
Making your decision
As with most decisions, you need to weigh up your options. If you are forced to sell with the tenant (because they are on lease for another 12 months or you can’t afford to not have them in the property), then you won’t have control of how the property is presented, or when the agent can show the property.
With fewer buyers looking, you will reduce the selling price as there isn’t the urgency or buzz around the property. This means potentially throwing money away. Keeping a tenant in the property means that the new owner will not be able to move in. Again, you are limiting your target audience to investors only. Anyone who wants to buy and move straight in may not even consider the property.
On the other hand, presenting your property to the market as a vacant possession allows you to reach a wider market. You’ll also have the opportunity to stage the property with beautiful furniture, which will attract more buyers through a great marketing campaign. The sales process will also be smoother as you can show the property to prospective buyers whenever they are available.
In summary, my advice is to think long and hard about selling an investment property with tenants.
We’d love to help you make the most of selling your home or investment property with home staging or styling. Call us on 0407 480 668 to learn more.