You Asked Us About Selling Rental Properties

by Sheldon Johnston and Sara MacLennan on 09. Dec, 2009 in Investing in Alberta Real Estate, Tips for Home Owners

A blog reader recently asked: "What is your take on having a condo unit as a rental while selling? Advantages/Disadvantages in the current market?"

I'm not a fan of marketing properties with tenants occupying them as a general rule.  Tenant occupied properties will generally take longer to sell, and will often sell for less than a property that is homeowner occupied.  Here’s why:

  • You often need 24 hours written notice in writing to show a property. This is often difficult to accommodate, especially since many appointments are set up less than 24 hours in advance…
  • Sometimes tenants will disallow showings even if proper notice is given, or they won’t be accommodating with the times you can show so that it won’t work for the buyer.
  • Properties that are easier to access will get more showings.
  • If the tenants like the property they may purposely leave things messy (or worse). Some tenants simply are not good housekeepers.
  • Some buyers will instruct their agents that they are looking for certain possession dates and many times that will exclude properties that have leases on them or a longer possession date then the buyers are looking for.

All in all if you are serious about selling a residential property than in my experience you end up with more money and a faster sale if the property is not tenant occupied.

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3 Responses to “You Asked Us About Selling Rental Properties”

  1. Chris Davies 13. Dec, 2009 at 4:51 am #

    Or you can sell to the tenant, which is a great way to do things. It’s particularly good when you rent to people who are new to town.

    It’s important to know the market, and thus how long you’re likely to be on the market. Know if the loss of cash-flow is worthwhile to your strategy.

  2. Neil Uttamsingh 14. Dec, 2009 at 10:29 pm #

    Also, what can happen if your suite is tenanted:

    There is a showing on the property, and the tenants are still at home. The prospective buyer that comes to see the house does not feel entirely comfortable viewing the house, as the tenants are still there. This can be a wasted opportunity.

    If the suite was vacant, and the tenants were not home, then the potential buyer can take his/her time looking through the property and feel comfortable doing so.

  3. Neil Uttamsingh 26. Dec, 2009 at 9:22 pm #

    Another thought I just had…

    Believe it or not, but sometimes prospective buyers, if not educated properly by their respective agent, think that a house for sale (tenanted) can only be sold to an investor.

    If the prospective buyer is not educated properly by their agent, they may not know that vacant possession might be an option.

    Regards,
    Neil.