Even if you have the most understanding of tenants, selling your investment property has the potential to turn into a challenge.
But there are ways to sell a tenanted property that don’t cause unnecessary stress for either party. Here’s our step-by-step guide to managing the process.
Step 1: Inform the tenant of your decision to sell
The earlier you’re able to have this discussion, the better for both of you. In an ideal world your tenant would have two to three months’ notice before the sale process kicks off. If that’s not possible, make sure the decision to sell is communicated in writing and verbally to give the tenant a chance to ask any questions or raise concerns.
Step 2: Work together on the property
If your property manager has completed regular inspections and your tenant has flagged repairs as they came up, preparing your property for sale should be relatively painless. But even if your property is in near-perfect condition, it’s a good idea to spread the responsibilities of cleaning and other maintenance between the tenant and paid professionals who’ll get the job done to a high standard.
Step 3: Communicate well ahead of inspections
Legally, property owners need to give 14 days’ notice before inspections begin and 48 hours’ notice before each subsequent showing. Stick to these timeframes and keep in mind that you are only able to show the property twice in any given week. We’d recommend giving even more notice whenever possible. After all, a tenant who has stopped cooperating is a liability when you need to impress buyers.
Step 4: Be ready to negotiate
In some cases, tenants may ask for a reduction in their rent while the property is up for sale. As a landlord you don’t have to agree to this, but it may be in your interests to consider it to maintain a positive relationship with your tenant. If you do make changes to the rent during this period, make sure this is captured in writing and communicated to your property manager.
Step 5: Bridge the gap between tenant and buyer
When inspections begin in earnest – and especially once you have a buyer ready to sign – your tenant’s panic levels will be on the rise. Keep communicating with them, either directly or through your property manager, so they’re fully aware of the sale date, settlement timeline and, ideally, the intentions of the new owner. If the buyer intends to keep renting out the property and wants to keep the same tenants, this is all the more reason to keep them calm and well informed.
There are many aspects to selling a tenanted property that you can’t control, but through regular, consistent communication it is possible to take a lot of the friction out of the process.