August 11, 2020
Selling Investment Property
Selling investment property that is tenanted
selling investment propertyShould you ever sell your investment property whilst it is tenanted?
Almost certainly never!
There are 2 possible circumstances I have personally encountered where I might consider this.
Case 1: Your tenant is more stylish than you
I have a unit in South Yarra, a very nice inner suburb in Melbourne. I moved out over 10 years ago when my second child was on the way and whenever I visit the property I’m always blown away with how good it looks. The current tenant has been there forever and has great taste in furnishings and is very house proud. The apartment has never looked better. When I visit I just want to move back in and buy his furniture off him.
In this case I would consider selling the property whilst tenanted as I don’t think it could really look more inviting.
Of course if there was a realistic chance that I would sell to an owner/occupier rather than an investor I’d have to think twice.
Case 2: You’re selling yield to another investor.
I own a few properties in the central north island of New Zealand. They’re not stylish, they’re cash cows. The rental yield is double digits and the majority of sales are to investors like me. If I had a stable tenant paying fair market price I’d be tempted to keep them in the property and offer an “incentive” in the form of discounted rental for the “inconvenience” of keeping the property neat and tidy during the marketing period.
In a market like this one I would be banking on selling to an investor based on “the numbers”. So I would be marketing based on something other than the “vibe”. In fact I’ve personally bought several properties sight unseen based on number crunching and outsourcing of building inspections. In these cases I can’t touch, smell, hear. I’m buying an income producing asset, not a “lifestyle” and so my marketing would be based on having a “top” rental income rather than anything else
If you’re property doesn’t fit into either of these 2 categories you are almost certainly throwing away money by not selling the property vacant. I don’t mean empty, I mean well staged and presented. That’s my first choice method when selling all property.
Until next time,
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