Initially, you may think that selling a property with tenants will be too difficult, however there are several benefits. Some of the pros and cons include:
You will still be receiving rent throughout the selling process.
Other investors may be attracted to a property that is already tenanted as they will receive rental income straight away.
Having a tenant living in the property can reassure investors that it is possible to rent this property out.
You will need to provide adequate notice to the tenant before having open inspections.
Tenants may not present the property in its best possible light, which could devalue it.
Problems may start to arise between you and the tenant if the property takes a while to sell.
If you are considering selling a tenanted property, the process will be a little different and will require a lot of communication with the tenant. If you are able to keep the lines of communication open between you and the tenant, it may help avoid problems down the track. Listed below are a few points you will need to consider before putting the property up for sale.
When selling an investment property there are several factors to consider.
1. First and foremost, consider the tenants. This may be your property but it is their home. Tenants can make or break a sale. Unco-operative tenants will make your agent’s life hell! It is up to them to present the property for inspection to prospective buyers.
2. Lease: Have a look at the term of your lease. It is always best to put the property on the market at the end of the lease. This will often up your pool of buyers to include buyers who want vacant possession, as well as investors who may want the tenants to stay. Do not put a 12 month lease in place and then decide to sell. The lease will be an encumbrance on the sale.
3. Tax: Investment properties attract Capital Gains Tax. Make sure you speak to your accountant to educate yourself on your own personal tax implications. The last thing you want is a huge tax bill.
4. Presentation: If you have difficult tenants, consider selling after they leave. Then tidy up the property and go to market.
Best of luck! If you need hints on how to handle tenants just give us a quick call.