You may have purchased an investment property in the past and decided it is now time to sell. Is it better to give tenants notice to quit before putting the property on the market or should vendors sell while the tenants are still in place.
Keeping tenants on during a sale certainly keeps the rental income coming in. Also, unless the property is dirty and untidy, it will usually present better with furniture and household items making it look lived in and camouflaging wear and tear.
However, there are times when a tenant in residence could be a financially less rewarding scenario. Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’ (what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price when the market drops before the property can be sold. Most rental incomes can’t compensate for this kind of loss. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.
Disgruntled tenants can also highlight the property’s faults in order to put off prospective Sydney purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many more to stay watchfully present.
Further, it is entirely possible another investor may purchase your property in Sydney, so be aware of this. If you have cooperative tenants, you may be able to sell the home and the tenants can stay without moving – a win-win scenario for the tenant and new owner.
Sometimes property owners have no inkling tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask your agent in Sydney how easy it has been for them to get access for periodic maintenance inspections or for trades people who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.
