Selling A Property With Tenants

In this article I have outlined all the tips and tricks in the book to make sure the sale of your investment property happens without a hitch.

If you want to make a maximum profit on the sale of your property, you will want to sell at the right time. To do this, you will need to closely follow the property market so you have a thorough understanding of when is the best time to sell. 

Make things easy for yourself. If the property market feels so hot you can’t wait for your tenants to vacate, put the investment on the market while they are still living in it. However, if there aren’t currently many investors looking to buy then maybe it might be better to wait until the tenants have come to the end of their leasing period.

It can be a challenging task to put your property on the market while your tenants are still living in it. You will need to organise inspections around the lives of your tenants while also negotiating a sale around lease agreements.

This can turn both your tenants and potential buyers away, so it’s important you handle the task with care.

Firstly, you will need to let your tenants know about the listing as soon as possible, so that they have time to prepare. Be respectful and give the tenants a chance to prepare their home for strangers traipsing through, as it is a kind thing to do.

As soon as a sale goes through, you should also inform your tenants, so that they know when they will need to vacate the property. 

In Queensland, tenants must receive at least four weeks notice from when the sales contract is signed to vacate the property. And this is only for periodic tenants. Tenants who are on a fixed lease will be able to stay until the end of the lease agreement. You can ask them to break the lease but they will be within their legal rights to want to stay put until the end. 

In Queensland, if you list a property within 60 days of the tenants signing a lease then they can break the lease without penalty to them.

If you are planning on having house viewings for your rental property, you will be legally required to give your tenants at least 24 hours notice, although more time would be considerate. 

In QLD, you need written permission from the tenants to carry out an open house, and if they don't accept for the agent to open up the house then all you can agree on is private inspections with 24 hours notice given.

Although you’d rather the tenants leave during an inspection, they’re not necessarily required to do so – there are no laws in place requiring this.

If you plan on listing your property on the market while tenants are living there, then you have to be prepared about having less control over how the home will be presented. For example, it might be harder to give the house a paint, or renovate it to make it look more appealing.

You also don’t have control over how neat and tidy the house will be when it’s on display. The lawn might not be freshly mown, nor the dishes on the drying rack put away. All these little elements can have an effect on potential buyers, and you need to be comfortable with this.

In preparation for the home open, you will also need to take photos of the property, and in Queensland, tenants will need to grant you permission to take photos of their items. 

You can use the fact the investment property has renters currently living in the house as a selling point. It shows the house is able to be rented, which makes it appealing to the future investment owners.

However, if owner-occupiers are looking to buy, they might be put off if there are tenants renting the house on a long-term lease. 

To find a happy medium, it’s best if there is around three months left on the tenancy, because it’ll show that the house can be leased while at the same time it’s not too long to wait if the buyers want to move in themselves. 

Although it’s financially convenient to lease a house when there are tenants in it, remember that if the house doesn’t sell right away then you might have your tenants move out leaving the property empty.

It can sometimes take a couple of months for the sale of a house to transfer to a new owner, leaving you without a rental income for a while. 

The best way to guarantee a smooth selling process of your rental property is keep your tenants happy. This way, you will have money coming in to cover your mortgage repayments while you search for a buyer. Happy tenants will also mean your property is more likely to be in a well-presented state during home opens. 

Repay your tenants for the inconvenience

As a tenant, it can be a hassle to ensure the house is show home worthy for each home open, so think about providing them with incentives to keep the place clean. Perhaps offer a slight rent reduction for a couple of months - it can be a nice way to say thank you for the inconvenience.