Selling a property while it’s tenanted can make real sense, especially when you consider potential investment buyers will find steady, reliable tenants a strong selling point.
While you may have some misgivings about how your tenants might react to their “home” being sold, there are some simple steps you can take to help make the process a positive one for everyone.
The key steps are to:
- Ensure open communication with tenants;
- Manage home opens and inspections carefully;
- Offer incentives to tenants, if required;
- Consider offering a lease break;
- Pick up the tab for cleaning, if required.
Let’s take a closer look.
1. Ensure open communication with tenants
Having good lines of communication with tenants is vital for a successful sale. Make sure you tell your tenants your plans well before you put the property on the market.
Apart from being common decency, a collaborative approach will smooth the way ahead for your sale, says Halli Moore of Buxton Brighton. Discuss fitting open houses around them and keep them informed about possible outcomes.
Let them know you understand the process is an inconvenience for them. In some cases, with enough notice, they may even save you the work of selling and offer to buy it themselves.
Moore says the biggest mistake owners make when selling a tenanted property is not working with the tenant. “They become a dictator, which can sometime get the tenant’s back up.”
2. Manage home opens and inspections carefully
Another common mistake owners make is assuming it’s the tenants’ responsibility to present the property perfectly to potential buyers, says Angus Graham of Hodges Sandringham.
Presenting the property in its best light is of course essential, so use the services of professionals like cleaners and gardeners and don’t leave it up to the tenants. Graham says you should also remember to leave the property as you found it after inspections.
Owners and their property managers also need to ensure any legislative requirements are met around how much notice tenants should be given for an open house.
3. Offer incentives to tenants
Selling an investment property can be a major upheaval for the tenants, especially if they face the considerable hassle and costs of moving out.
Disgruntled tenants can have a negative effect on the presentation of the property to potential buyers, so Moore suggests considering rental compensation during the campaign, or maybe even offer the services of a cleaner or gardener once a week, among other incentives.
4. Consider offering a lease break
In some cases, it can be more beneficial to offer tenants the chance to break the lease, especially if they are very unhappy with the prospect of a sale.
While you will lose rental income and not have the chance to sell the property as a “going concern”, it will give you the chance to work on the property, so it can be presented at its very best and you can avoid the need to organise inspections and open houses around tenants’ schedules.
5. Pick up the tab for cleaning
Offering to have the property cleaned and maintained for the duration of the sale not only helps avoid confrontations with tenants, it gives you the best chance of ensuring your property can really shine while still having tenants. Making life easier for tenants in this way will make yours easier as well.
This article was originally published on
16 Jul 2019 at 10:00am
but has been regularly updated to keep the information current.