Selling With Tenants In Situ

Discussion in 'The Buying & Selling Process' started by Beeeater, 15th Oct, 2018.

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  1. Beeeater

    Beeeater Member

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    14th Oct, 2018
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    BNE
    Hi All,

    I am considering selling an investment property with the tenant in situ. There is no problem with the tenant, but due to the location, a buyer will most probably be an investor, and not someone looking for their PPIR.

    Q1 - So, how can I go about this task. Are there specialist sellers that do this ?

    Q2 - I assume selling with tenant in situ is contractually quite simple - is this correct ?

    Q3 - Yield would be an important KPI. As the rental income is fixed for 12 months, the sell price could be determined by means of the yield. But what yield would be reasonably expected ?
    In this context : Sell Price x Yield% = Annual Gross Rent
    Thanks All.
     
    Beeeater, 15th Oct, 2018
    #1
  2. wylie

    wylie Moderator Staff Member

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    The sell price won't be determined by the yield. It will be determined by similar properties in the area.

    I'd always remove tenants before selling if possible, because tenants can hinder the sale if they aren't cooperative.

    We've tried selling with a tenant which was hopeless. He kept the place untidy and made it difficult for our agent to hold open houses. He was an agent himself, so knew exactly what he was doing.

    The other thing is that if someone does want to buy as an owner occupier, you can lose them if they cannot move in on settlement. So you need to ensure you have time to give appropriate notice to the tenants to leave if that happens.
     
    wylie, 15th Oct, 2018
    #2
  3. thatbum

    thatbum Well-Known Member

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    My general thoughts are that its a bad idea to sell with tenants, even if you don't think an owner occupier will buy it.

    You're just limiting your potential buyers for little or no good reason.
     
    thatbum, 15th Oct, 2018
    #3
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  4. jazzsidana

    jazzsidana Well-Known Member

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    Unless the tenants are really accomodating and looking after the place really well, I would surely move tenants out before selling the property..

    Few simple reasons.
    1) Presentation of the property when clients are visiting is not in your hands.
    2) Agent needs to give enough notice to tenants (normally 24hrs) before allowing clients to visit.
    3) People viewing the property may not be very comfortable if tenants are in the property at time of visiting.

    and more ...

    Cheers,
     
    jazzsidana, 15th Oct, 2018
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  5. Beeeater

    Beeeater Member

    Joined:
    14th Oct, 2018
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    Location:
    BNE
    Thanks for all your replies, I now see that it would be better to sell with the property vacant. A lot of things in there that I had not considered. :)
     
    Beeeater, 16th Oct, 2018
    #5