The general rule of thumb is, once you have an investment property, you shouldn’t sell it. But if you are in a position where you have to sell, should you sell to your tenants?

From a tenant’s point of view, they may already be thinking of buying a house, and if they like your property, they may well be interested in making you an offer rather pack everything up and relocate.

In principle it seems like a good idea… but there are a few other things to consider. So, let’s look at some of the pros and cons of selling to your tenants:

Pros of selling to your tenant

The process is streamlined:

• It will probably be quicker as there is no need to go to market
• there’s no need to negotiate end of lease if you need to sell in the middle of your tenants contract
• Reduced hassle associated with holding open homes

Reduced selling costs associated with

• marketing the property
• paying a loan when the house is empty and no rental income
• tenants may accept the property in its current condition, so you may not have pay out for wear and tear imperfections, such as redecorate

The cons of selling to your tenant

You may not get the best price:

• tenants know the property and its issues, so may try to negotiate a lower price
• tenants often have a sense of entitlement and think they shouldn’t have to pay top dollar
• making minor improvements may add more value on the open market

So, it’s not as clear cut as it appears.

Like everything in life, it depends on your circumstances. If you’re after a quick sale, and you’re offered a reasonable price by your tenants, it might be a good option.

We find a two-handed approach often works; tenants are given the option to buy, but if you don’t feel that’s reasonable, you still have the final say, and you’re still within your rights to look for a better offer from the open market. Good communications with tenants are essential to ensure the tenant will work with you, and you will both have a positive experience and the best outcome.

This is where we come in. Our relationship with our tenants in the properties we manage is built on mutual respect and understanding. We pride ourselves on professionalism; how we communicate and manage tenants is just one of the many reasons our property management services are so successful.

If you’re thinking of selling your investment property, talk to us first. We can explain all the legal requirements you need to do before you put it on the market (read our blog ‘The key to selling your property with tenant’), and we will also give you tips on what you can do to add value to the property.

We are also sales agents and have a large database of people looking for all types of properties; we’ve often found a buyer willing to offer a fair price without the seller paying the marketing costs of putting the property on the open market.

Get in touch and see how our property management services can make your life easier and free you up to do more of the things you want to do.

Simply give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat.

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