We wrote an earlier blog post on whether you should sell your property with tenants in-situ or sell your property empty. More often than not, investment properties are sold with the tenant in the property due to the valued income the tenant provides.
With an empty property, a seller must be prepared to cover the loss of the rent for an unknown period until the property sells, and not everyone is in a financial position to do this.
Tenants do not always embrace a sale campaign with open arms and many investors complain about tenants who are unhelpful, uncooperative or problematic. In an ideal world, your tenant will cooperate and present the property well, but unfortunately this isn’t always the case.
We’ve thought about some strategies for you to keep your tenant on side throughout the sale process.
Open and honest communication
First and foremost, it pays to be open and upfront with the tenant regarding the sale. Encourage your agent to be on the front foot and organise open for inspection dates and times in advance and where possible, at times that are mutually suitable for the tenant. This will assist to alleviate some of the uncertainties for the tenant and help them prepare for visitors.
Your tenant is entitled to an initial seven days’ notice period of your intention to sell and then appointments should be strictly by prior agreement with at least 24 hours’ notice. This includes visitation by a building inspector, photographers and scheduled open inspections.
It is not always likely that your property will be purchased by another investor. As such your tenant needs to be prepared for not only the inconvenience during the sale process but ultimately shifting on. It will be important to give the tenant plenty of notice and maintain clear lines of communication so they can start to organise for potentially moving out.
However, there is also a chance that your property could be purchased by another investor. In which case, it is in the best interest of the tenant to present the property well to appeal to the new owner and maintain their tenancy agreement. Your agent could highlight this to the tenant if required.
Keep your tenant informed during the sale process to reduce their anxiety, and hopefully secure their cooperation in the process.
Have you considered offering a financial incentive to your tenant such as a rent reduction to compensate for the impact to the tenant’s lifestyle during the sale process? Consider negotiating with your tenant an appropriate discount to their weekly rent to encourage and reward good behaviour and full cooperation.
Your property must be vacant and clean on the day that the new owner shifts in. Another strategy is to foot the bill for the final professional clean of your property to compensate for any disruption experienced by the tenants throughout the sale.
Don’t forget to ask your tenant if they would like to buy the property because you just never know! Give the tenants the opportunity to purchase the property before you list it on the market. If you and the tenant agree on a purchase price, it is unlikely that you will need to employ the services of a real estate agent, ultimately saving on selling costs. If you have happy tenants and they want to stay in the property long term, it could pay to ask the question!
As a landlord, put yourself in the place of the tenant. It will help for you to understand that while you own the rental property, it is also the tenants home. Your tenant has been a great asset, supplying crucial income. Selling your investment will no doubt be disruptive and you should ensure that they feel valued and listened to. Consider our strategies to maintain a good relationship with your tenant if your deciding to sell.
If you’re thinking of selling a tenanted property and would like our opinion on preparing it for sale, feel free to call any time on 02 6171 2220. We can inspect the property and provide some tips on getting cooperation from the tenant in preparation of the sale. We would also be able to advise a realistic timeline for you to place the property on the market in order to maximise your sale price.