Selling a rental property while you have tenants in place can be quite tricky. It is certainly harder than selling a vacant property. However there are good and bad sides to having a tenant in place.
- You’ll still be receiving rental income from your tenant while your investment property is on the market.
- You’ll likely attract more property investors than home buyers because they won’t need to look for tenants to rent the property. Once they have bought the house, the investor will start receiving rental income from the tenant immediately.
- Having a tenant in place could make the property look less attractive because of clutter which can repel potential buyers.
- With a tenant, you don’t have control over how you want the property to look to potential buyers. Your tenant might be uncooperative and may even purposely make the space untidy to delay the sale if they fear eviction.
- If you ask your tenant to move out, you will no longer be earning income. Your property could be vacant for months.
Things to do when selling your investment property with tenants
You should inform your tenant of your intention to sell the property as soon as possible. Being open and honest with them will make them more likely to cooperate in return.
Selling the house can be an ordeal for your tenant. The burden of making sure the house is neat and tidy is their responsibility and they may also need to look for another place to rent. So for their troubles, you can give them some form of compensation. It is not uncommon to offer them a rent discount. Some landlords even offer free rent for a week or two during the sale period.
When it comes to house viewing and inspection, the law in most Australian states requires that tenants are given written notice of at least 24 hours before showing the property to potential buyers.
If you’re considering asking your tenant to leave because you want the property vacant, it’s imperative to understand your lease. You must comply with the legal requirements when giving a ‘notice to vacate’ according to your state’s legislation. These are as follows:
- Queensland: For a fixed-term agreement 30 days written notice is required and 90 days for a periodic agreement.
- New South Wales: 4 weeks written notice.
- Victoria: 60 days written notice.
- Western Australia: 30 days written notice.
- South Australia: 60 days written notice.
- Northern Territory: 42 days written notice.
- Tasmania: 28 days written notice.
Talk with your agent or your property manager to ensure a smooth selling process not only for you but to also for your tenant.