Selling your investment property can be a smart strategy for wealth building, but having a tenant adds extra factors to think about. Whether you’re considering selling your property while it’s occupied or empty, it’s essential to grasp the implications for both you and your tenant. Continue reading to learn about the key considerations when selling a tenanted investment property.
The pros and cons
Selling a property with tenants can offer notable benefits. One key advantage is the ongoing cash flow from rental income, which can make your property more attractive to buyers, particularly investors seeking immediate returns.
However, there are also challenges to consider. Coordinating inspections and open houses can disrupt the tenant’s routine. Additionally, potential buyers may hesitate if they have to manage the logistics of finding temporary housing until the tenant moves out, especially if they intend to occupy the home themselves.
Legal and practical considerations
In Australia, selling a property with tenants requires compliance with the residential tenancy laws in your area. Typically, a tenant has the right to stay in the property until the lease ends, unless it is terminated according to the lease terms or by mutual agreement between the landlord and tenant.
When listing the property, it’s essential to be transparent with potential buyers about the tenancy situation. Buyers should be made aware of the lease details, including its duration and rental income. This clarity helps set expectations and can reduce potential complications during negotiations.
Empty vs. occupied: What’s the best strategy?
Choosing to sell your property while it’s occupied or vacant depends on several factors, such as market conditions, your target buyer demographic, and the tenant’s willingness to cooperate. An empty property usually provides greater flexibility for staging and showings. Without tenants, you can showcase the home more effectively, which may attract owner-occupiers who are willing to pay a higher price for a move-in-ready space.
Keep communication open
If you decide to sell your property while tenants are still living there, keeping communication open is crucial. Ensure that both your property manager and tenants are aware of the sale and understand their responsibilities throughout the process. Providing incentives or modifying their lease terms can help minimise any disruptions and encourage cooperation.
Choosing whether to sell a property with tenants or to wait until it’s vacant depends on your specific situation and objectives. Evaluating the local market, understanding your target buyers, considering your tenant’s circumstances, and consulting with a reliable legal or financial advisor can help you make a well-informed decision that aligns with your long-term investment strategy.
Remember, this article is general in nature and is not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.
