Selling Your Investment Property: Should You Sell Vacant or with a Tenant in Place?
Selling an investment property comes with several important decisions, and one of the biggest choices you’ll face is whether to sell with a tenant in place or with the property vacant. Each option has its own advantages and challenges, so it’s crucial to weigh them carefully before listing your property. Here’s what you need to consider to make the best decision for your situation.
Selling with a Tenant in Place
Selling your property while a tenant still occupies it can be beneficial, especially if you’re targeting other investors. However, there are some potential drawbacks to keep in mind.
Pros:
- Attracts Investors: Buyers looking for an investment property may see a tenanted home as an attractive option since they can start earning rental income immediately.
- Continuous Rental Income: Until settlement, you will continue to receive rental payments, reducing financial strain during the sale process.
- Reduced Vacancy Risk: If the buyer is an investor, they won’t have to go through the process of finding new tenants after purchasing.
Cons:
- Limited Buyer Pool: Owner-occupiers may be deterred if they have to wait until the lease ends to move in.
- Access for Inspections: Coordinating property viewings with tenants can be challenging, and if they are uncooperative or keep the home in poor condition, it may negatively impact the sale.
- Potential Lease Restrictions: Some leases have fixed terms that must be honoured, which could limit the buyer’s flexibility.
Things to Consider:
- Lease Terms: Check whether the lease is periodic or fixed-term and when it expires. This can influence a buyer’s decision.
- Tenant Cooperation: A cooperative tenant can make the process smoother, whereas an uncooperative one may hinder inspections and buyer interest.
- Presentation of the Property: Ensure that the tenant maintains the property well to create a positive first impression for potential buyers.
- Incentives: In some instances, you may want to provide a rental rebate to incentivise tenants to present the property and cooperate with inspections.
Selling a Vacant Property
If you decide to sell your investment property without a tenant, you’ll have more flexibility but also additional costs and potential risks.
Pros:
- Larger Buyer Pool: Owner-occupiers and investors alike will be interested, increasing your chances of a quicker sale.
- Easier Inspections & Presentation: Without tenants, you have full control over how and when the property is shown, making it easier to stage and present at its best.
- Renovation & Repairs: You can complete any necessary upgrades or maintenance without coordinating around a tenant’s schedule.
Cons:
- No Rental Income: If the property sits on the market for a while, you won’t have any rental payments to offset holding costs.
- Increased Holding Costs: You’ll need to cover mortgage payments, rates, and other expenses without tenant contributions.
- Potential Market Timing Issues: If the market is slow, a vacant property may remain unsold for longer than anticipated.
Things to Consider:
- Staging & Presentation: An empty home can sometimes feel cold or uninviting. Consider staging to help buyers visualise its potential.
- Time on Market: If the property doesn’t sell quickly, you may face financial strain from extended vacancy.
- Marketing Strategy: Highlighting move-in readiness can appeal to owner-occupiers while showcasing rental potential can attract investors.
Making the Right Choice
Your decision should align with your financial goals, market conditions, and target buyer. If you’re in a strong investment market, selling with a tenant may be advantageous. However, if demand from owner-occupiers is high, selling vacant might help you secure a quicker and higher-priced sale.
If you’re unsure about the best strategy, speak with a local real estate professional who understands market trends and buyer demand in your area. They can guide you on the optimal approach to maximise your sale price and minimise stress throughout the process.
Looking to sell your investment property? Contact MIX Property Group today for expert advice and personalised support!