How To Sell Investment & Tenanted Property [Guide & Tips]
Selling a home can often be a lengthy and involved process; selling a leased or tenanted investment property can often be even more challenging. Tenants can make the process complicated and difficult, especially if they are not happy about the upcoming sale.
For some quick, helpful tips with selling a tenanted investment property, have a look at this video produced by PRDnationwide.
Even helpful tenants require thought and extra steps in the selling process, so it pays to know how to work with them to achieve a sale at the right price. Our how-to guide gives detailed answers to many questions related to selling a leased property so you’ll know what to expect before putting your house on the market.
If you would like to hear from an authority on selling, you can’t go past the experience and knowledge of a top-performing real estate agent. Compare top-selling real estate agents in your area by visiting our agent comparison tool.
Table of Contents
Can You Sell A Tenanted Property?
House owners can sell their investment property at any time, including when it is leased. However, sellers have more to consider when tenants are in place to ensure the sale process goes as smoothly as possible. Extra considerations include:
Giving notice of your intention to sell to tenants
Planning viewings and inspections around tenants
Giving notice for tenants to move out
Being unable to present the property as you desire
Losing potential buyers who do not want a tenant
Losing rental income if tenants decide to move out
During the selling process, investors must ensure they follow all laws and regulations surrounding the treatment of their existing tenants. This usually means giving appropriate notice when required. Investors should also aim to collaborate with tenants to make the process as easy as possible, especially if it’s important to the investor that the tenants remain in the property.
This guide provides more information below to help you through the process. However, it’s also a good idea to get in touch with your local real estate agent. They can answer any remaining questions you have, as well as help you with laws and regulations specific to your state or territory. Our comparison service helps you compare real estate agents in your area to find the one best suited to your needs.
What Are The Legal Rights of Tenants When Selling?
There a laws in place to protect tenants when their home is put up for sale by the owner. These vary by state so investors should familiarise themselves with the laws and regulations within their own state or territory. Generally, tenants have the following rights:
Tenants in a fixed term lease cannot be forced to move out of the property.
Tenants on a periodic lease must be given appropriate notice to vacate.
Tenants must keep the home in a reasonable condition but they do not have to provide additional help to make the house presentable for sale.
Tenants must be given the appropriate notice before the home initially goes up for sale and before any inspections or viewings.
Tenants can deny entry for the purposes of photography on the grounds that it is a breach of privacy.
Tenants can deny entry for an unreasonable amount of viewings. Generally, two viewings per week is considered reasonable.
The new buyer must continue the lease as normal and give appropriate notice if they want the tenant to move out after the lease expires.
Can You Ask Your Tenants To Leave When You Want To Sell?
When selling an investment property, investors need to consider whether tenants are of benefit to the sale or not. If not, investors cannot ask a tenant to vacate the property if they are within a fixed term lease. This will mean selling the property with tenants in place, unless the investor decides to delay the sale until after the fixed term lease expires.
Sellers can give notice to leave if tenants are on a periodic lease; however, the appropriate notice period must be given. The same notice period applies to fixed term leases, providing that the last day of the notice period occurs after the last day of the fixed term lease. The notice period differs with each state
In all Australian states, investors cannot legally require a tenant to vacate a property before a fixed term lease is expired.
Tenant Notice/Vacating Periods In Australia
The table below shows the varying notice periods by state. This is a guide only and should be confirmed by visiting the corresponding link relating to notice periods in your state or territory.
Table 1: Notice Periods When Selling An Investment Property
Each state has its own process and rules for handling tenants when selling an investment property, so it is essential to check what these are with the authority in your own state.
Investment Property Photography
In all states, tenants are not required to allow entry for photography for advertising purposes. Investors should attempt to come to an agreement with the tenant to allow them to photograph the inside of the property. It may help:
to suggest tenants remove any personal, private or valuable possessions while the photographer is at the property
If tenants and investors cannot come to an agreement, investors can always use photos from when they advertised the property for rent. This can often be beneficial when investors suspect that the property won’t be presented to their standard during the sale process. Have a look at our real estate photography costs guide for a price list on what you could expect to pay when trying to sell your investment property.
Owners can take photos of the outside of the property without permission
There are both pros and cons to selling a property with tenants. It is best to consider your own situation before deciding whether to sell while your investment property is tenanted. The pros and cons include:
If the property is appealing to investors, tenants are often welcome by prospective buyers.
Tenants may not present the property according to your preferences.
Investors will receive rental income during the sale process.
Notice must be given before every viewing and tenants may refuse entry if they feel the number of viewings is unreasonable.
Helpful tenants can save you time in preparing the property for sale.
If tenants do not want you to sell, they may be difficult during viewings or leave the house untidy.
Potential buyers looking for a home may find existing tenants inconvenient.
If investors need to sell while their property is tenanted, it is essential to work with tenants and keep them informed. If their preference is to sell without tenants, investors must ensure they provide all required notices and follow local state or territory laws.
Process Of Selling An Investment Property
Sometimes, the ideal time to sell an investment property presents itself when tenants are right in the middle of a fixed term lease. This can present some challenges and extra considerations, but it can also work to the investor’s benefit. If it’s the right time to sell financially, then there are plenty of things you can do to work around current tenants. This is especially important when investors need tenants to stay in the property.
Market to investors Investment properties that come with tenants already in place are extremely appealing to investors looking to buy. Use your current tenants to your advantage and market the property accordingly. Tenants will feel much better showing their home to potential investors who likely won’t be looking to end their tenancy.
Give plenty of notice No one likes to be inconvenienced, so the first step to keeping your tenants happy is giving them plenty of notice that you’re planning to sell. Check how much notice you legally need to give them, but try to give more whenever possible.
Communicate Ensure to keep your tenants in the loop by giving them regular updates on what’s happening. They will likely appreciate it and may even be willing to help wherever they can. It’s also important to keep one line of communication with tenants, rather than confusing them with updates from multiple people. A real estate agent is often the best person to manage communication between the investor and tenants.
Make tenants feel welcome As soon as a tenant hears that the owner is selling, they usually become anxious about their own position. Will they have to leave? If so, how soon? Who will their new landlord be if they stay? Will their lives be disrupted during the sale process? These questions should be answered as soon as possible to reassure tenants and allow them to plan ahead. If tenants are within a fixed term lease, be sure to explain that their lease will continue as normal and you will advise them of the new landlord’s details as soon as possible after settlement.
Aim to keep disruptions to a minimum
The sales process can be quite disruptive to tenants, which can get them on the wrong side if not handled with care. Aiming to work collaboratively with tenants when planning viewings, valuations and maintenance work will help keep them onside. As a thank you for their cooperation and assistance, some investors offer reduced rent during the sales period or a week’s free rent at the end of the process.
Open houses can be inconvenient for tenants, especially if you have multiple viewings scheduled. It can also be challenging for owners because they don’t have much control over how the house will be presented. Here are some tips to making your open houses a little easier on everyone involved:
Organise fresh flowers to be delivered once a week. Tenants will likely appreciate flowers that brighten up their home and it should help make the house look presentable during viewings.
Organise a cleaner to spruce up the house before each open house. Providing tenants feel comfortable with this, they will likely enjoy effortlessly having a clean home during the sales process and won’t feel too overburdened with keeping the house ready for inspections.
Offer a discounted cafe meal or movie tickets during open houses. Tenants may not appreciate having to leave home during open houses, especially if they normally do things at home on these days. Offering an incentive to enjoy an outing is a nice way to thank them for their help and understanding.
Thinking of ways you can lighten the load and make an open house a positive experience for tenants will not only help keep tenants happy but will also ensure potential buyers have a positive experience when viewing your investment property.
More Questions About Selling Investment Property?
Selling a leased investment property need not be as difficult as it initially seems. By ensuring to follow local tenancy laws and regulations and keeping the lines of communication open, investors can ensure tenants remain reasonable and even helpful during the sales process.
Engaging a local real estate agent is a great way to make sure you are supported during the process. They can answer any questions you have regarding selling a leased property and can also help manage current tenants to make the process easier. Our comparison service makes it easy to find and compare your local agents quickly, so you can get your investment property on the market as soon as possible.