If you’re planning to sell a property which is tenanted it’s important to be mindful of securing the tenant’s cooperation in the process.
It’s a good idea for investors considering selling their rental property to consider how a tenant views the whole process, which – to them – is likely an inconvenience followed by a possible eviction.
One of the best strategies is to be upfront and honest with the tenants throughout the process, including the possibility of the property being sold to an owner-occupier so they can start to prepare for potentially moving out.
It’s important to explain the period of time they will have after the sale to move, and you can also tell them that you will provide a reference attesting their cooperation.
Of course, if there is a fixed lease in place on the property then the tenants can stay until the end of that lease – unless they negotiate to leave early with the new owners.
However, if you own an “investment grade property” chances are quite high that another investor will buy it.
In this case, it is in their interest to present the property well and it is likely they could stay and the new owner will become their landlord.
If you promise to keep them informed during the sale process, this can help to reduce their anxiety.
So why not encourage your tenants to give their cooperation freely by reducing the rent by, say, $20 to $30 per week during the period that the property is on the market?
While this may not mean much to you, at the end of the day it will to most tenants.
By law there are some parameters around inspections and these may differ from state to state.
So it vital to work with the tenants regarding when the real estate agent can bring buyers through and the extent of the campaign.
Inspections should mostly be fixed time open house to minimise inconvenience and the times should agreed in advance.
Other inspections should be strictly by prior agreement with at least 24 hours notice.
You must state that no one will go through except as agreed and always accompanied by the real estate agent.
In an ideal world, your tenants will cooperate and present the property well, but unfortunately this isn’t always the case.
Sometimes a tenant is uncooperative, messy or has horrible furniture, and you have to make a judgment call on whether to sell with them living in the property.
If it is unavoidable you simply have to do the best you can.
A really difficult tenant can make it difficult to sell at a good price and generally speaking tenancy laws do very little to help.
However, fortunately this is rare with most of the problems caused by the tenant being taken for granted, which can be overcome with good communication from the outset.
Also don’t forget to ask them if they would like to buy because you just never know!