What Owners Need to Know
Perhaps your rental property has had strong capital growth and you want to sell while the market’s at a peak. Alternatively, you may be moving to another city or state and want to sell up your rental properties and buy in a new area.
Whatever the reason for selling your rental property, there are some important things to consider if you’ve currently got tenants in the property. There are a number of factors when it comes to selling residential real estate, but you’ve got some very specific obligations if the property you own is currently tenanted.
It’s certainly not a smart move to blindside your tenants. Keep them in the loop if there are any changes that could alter their position.
Of course, if you’re just toying with the idea of selling your rental property, there’s no point alarming your tenants if you’re not going to act upon the idea for a year or two.
However, there will come a time when your desire to sell could conflict with your obligations. At this point, you’ll need to have a chat with your tenants.
It’s necessary to check which kind of tenancy agreement you have, as this will affect what approach you can take with regards to selling your investment real estate.
For instance, if you’ve signed a fixed-term agreement with your tenants, you’ll have to let this period of the agreement run through – you can’t ask them to move out part way. You’ll need to rethink a quick sale if you’ve got this type of agreement!
By contrast, you have a bit more flexibility with relation to periodic tenancies. If you want your tenant to move out before you put your property up for sale and you have a period tenancy agreement in place, you’ll need to provide the appropriate notice in writing, which can differ from state to state.
Do I Sell With Tenants in the Property?
One big question landlords ask when they’re looking to sell their rental properties is whether they should host open inspections while the tenants are still living there or attempt to sell the property uninhabited.
If you go for the latter option, you have more flexibility with how you present the property, plus you won’t need to worry about tenants not keeping it tidy.
Another option is to host option inspections while you still have tenants in the property. This may be a good approach if your tenants are reasonably tidy and you trust that they’ll keep the property in good shape when prospective buyers are being shown around it.
Of course, you’ll need to give tenants appropriate notice of open inspections. If this is going to encroach on their everyday enjoyment of the property, it may be wise to offer a rental reduction.