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Reproduced with permission.
If the time has come to sell your investment property, there are a few things to think about before you get started.
One of the most important considerations is whether to wait for the lease to end and sell the property vacant or to sell it with tenants.
There are pros and cons associated with both. It generally depends on the market you are selling to and personal preferences.
If the market is comprised predominantly of buyers who wish to live in the property, having a tenant in place can be a turn-off as the buyers will have to wait until the lease expires before they can shift into their new home.
Some buyers may also struggle to see the potential of the property as their future home if it is full of someone else’s belongings.
However, potential investors may consider the current tenancy an advantage because they will receive rental income from day one without incurring the expense of advertising fees or running the risk of having a vacant rental property.
If the property is going to be sold with tenants, here are some tips.
Firstly, investors will be attracted to the rental income the property earns. The higher the rent, the more appealing it becomes.
Ensure you are keeping up with market rents. If the amount the tenants are paying is not as high as the market rate, consider a rent increase when the lease permits.
When you sell your own home, it is in your best interests to keep it well maintained and presented well to buyers.
Tenants may not keep the property as tidy as you would, so you might discuss the possibility of discounting their rent in return for their agreement to keep the property in a clean, tidy and well-presented condition.
This financial incentive should avoid the problem many investors encounter when trying to sell a tenanted property.
Be sure to check the legislation in your state regarding how much notice landlords are required to give tenants if they wish to sell the property.
Also be familiar with the rules and regulations surrounding the frequency of open inspections and how much notice the owner is required to give the tenant prior to conducting inspections.
This can be a downside to having tenants in the property because it makes any last-minute inspections very difficult.
In summary, if and when the time comes to sell your investment property, the first step is to consider the predominant types of buyers in the market. If the property is going to attract investors, a current lease just may be the carrot you need to secure the sale.
– Peter “The Property Professor” Koulizos
