Selling house with tenant - motivate tenant?

Hi all

I'm tentatively thinking about selling an IP I own. It's tenanted, but past the lease period, so a 60 day notice period to vacate the property.

It's not an obvious investment property (partly why I'm thinking about selling, shouldn't have bought it in the first place!) and the likely purchaser wouldn't be an investor. However, the tenant keeps the house really clean and tidy, and it'd inspect really well as it is.

So, I'm mulling over options in my head, such as:

1) Just evict the tenant now on 60 days notice, but this would mean the house wouldn't inspect very well during that period, and if I wait until the tenant is gone, it'd be empty and not look half as good as it currently does, so I'd probably end up renting furniture.

2) Tell the tenant that the tenancy will be ended with 60 or 90 days notice once the house is sold. This seems the better option in terms of having a house that looks good for inspection, but how can I motivate the tenant to stay during the sales period?

Cheers
Jonathon
 
Hi all


2) Tell the tenant that the tenancy will be ended with 60 or 90 days notice once the house is sold. This seems the better option in terms of having a house that looks good for inspection, but how can I motivate the tenant to stay during the sales period?

Cheers
Jonathon

You can't.

If I was a tenant, knowing that you were selling the property, and once sold, would then give me 60 - 90 days to get out, I would just give you the 14 days and move when I sorted something else out.

Possibly, in order to motivate, you could offer a cheaper rent for this period (due to also prospective buyers coming through the place).

By why do you want to sell it with vacant possession? Why wouldn't the tenant stay once a new owner has bought it?

Cheers,

F
 
Option two.
that leaves you with a tenant in place in case an investor does decide to buy it, or you can just do a longer settlement in the case of OO.
 
Hi all

I'm tentatively thinking about selling an IP I own. It's tenanted, but past the lease period, so a 60 day notice period to vacate the property.

It's not an obvious investment property (partly why I'm thinking about selling, shouldn't have bought it in the first place!) and the likely purchaser wouldn't be an investor. However, the tenant keeps the house really clean and tidy, and it'd inspect really well as it is.

So, I'm mulling over options in my head, such as:

1) Just evict the tenant now on 60 days notice, but this would mean the house wouldn't inspect very well during that period, and if I wait until the tenant is gone, it'd be empty and not look half as good as it currently does, so I'd probably end up renting furniture.

2) Tell the tenant that the tenancy will be ended with 60 or 90 days notice once the house is sold. This seems the better option in terms of having a house that looks good for inspection, but how can I motivate the tenant to stay during the sales period?

Cheers
Jonathon

Hi Jonathon,

May I ask why you say it's not a good IP?

Is there a chance that the current tenant may want to buy it?

Could you offer the tenant a rental discount or pay for a cleaner for them (once a wk) so they stay on during the sales period?

Regards,
M&M
 
Hi Jonathon,

May I ask why you say it's not a good IP?

Is there a chance that the current tenant may want to buy it?

Could you offer the tenant a rental discount or pay for a cleaner for them (once a wk) so they stay on during the sales period?

Regards,
M&M

It's a very low yielding property, around the 2% mark! I bought it for capital gain and it's given me some in the past 2 years, but not nearly as much as if I'd chosen a better art of Melborne. (Better in the sense of capital growth)

I'm definitely thinking about some kind of rental discount, expecially if the place sells.

My situation is that I'll only sell for a certain price, ie I'm really only testing the market, and I wouldn't be too bothered with keeping it for another few years, but with some of the silly prices being paid at the moment, I'm prepared to take the chance of losing an excellent tenant, albeit a low-paying one, for the chance of getting a high price right now.

Incidentally, if I do sell it, I'll purchase interstate. I'm bullish on Melbourne in the very long terms, but not necessarily the next 3 years.
 
I don't understand why you want to kick out a good tenant. Is the 2% yield typical of that area, or is your tenant underpaying? If it is typical of the area, then what's to say an investor (one looking for capital growth rather than yield) wouldn't buy it. If your tenant is as tidy and good as you say, then I'd say that's just a plus to an investor. They don't have to worry about finding someone or having a vacant period. Or if it is an owner occupier you sell to, then most settlements are about 2 months anyhow, so just give your tenants notice then when it goes unconditional and offer vacant possession but the purchaser will just have to wait for a 2 month settlement (this is what I had to accept when I bought my PPOR). Seems like a waste to kick out a good tenant, especially when there's a chance you won't even sell yourself.
 
I was told that you can give less than 60 days if the property is sold (by a RE agent). I wondered how people sold places with vacant possession seeing as settlement period is usually 6 weeks (NSW).

Is that correct?
 
I vaguely remember something like that in Vic, but in Vic the settlement dates are entirely flexible. 60/90 days is the norm, but 30 or 120+ are not unheard of.
 
I was told that you can give less than 60 days if the property is sold (by a RE agent).

When I bought, the agent said I had to have at least a 2 month settlement if I wanted vacant possession, I wanted to move in sooner. He said the vendor had to give 60 days notice here in Victoria. They weren't some dodgy little suburban agent, so I suspect they knew what they were talking about, maybe they didn't. Please don't tell me they made me move twice and live with someone for five weeks for no reason! :eek:
 
If I was selling an investment property I would leave the tenant in place unless the buyer requested vacant possession, in which case I would give the relevant notice.

The only reason I would give the tenant notice is if they were hampering the sale either by not allowing viewings, or poorly maintaining the property.

Regards

Andrew
 
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