"It’s imperative that you work on establishing some rapport with tenants and work hard to avoid inconveniencing them any more than is absolutely necessary."
The seven key steps to selling a rental property: Leah Calnan
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While I am of the belief that owning an investment property should be a long-term commitment, there may be times when a rental property needs to be sold, and those circumstances may include up and coming retirement, reducing debt, marriage separation and death – just to name a few.
Selling a rental property can be a dramatically different experience to selling your family home. Not only do you need to think about your wants as the owner, but you must also strongly consider the tenants throughout the whole process. Yes, I know the tenants don’t own the property but you must remember it’s their home and when you sell a rental property, with tenants in it, you are selling their home.
Of course, you may decide to sell the property between tenancies. There are arguments for and against putting an investment property up for sale when it is vacant:
The pros of marketing a vacant property for sale include:
The pros of marketing a tenanted property (with good tenants) include:
Good tenants can definitely add value to your property. But even the best tenants will be slightly concerned when you put their home up for sale. So I make one simple recommendation to assist everyone, and that is to make sure communication remains at the highest level possible. Over the years I have seen many things go pear-shaped, with a sales campaign of a rental property, and the worst way to start the campaign is to erect a For Sale board at the property before you let the tenants know.
Can you imagine coming home from work one night and finding a For Sale board up on your home when you know nothing about it? Now I know that a sales agent would never do that to an owner-occupied property, yet it happens time and time again with rental properties. And I really don’t understand why.
STEPS FOR A SUCCESSFUL SALES CAMPAIGN
We have managed many sales campaigns for our property owners over the years. A result of this experience is that I have come up with a series of steps that, if followed, will help you in your campaign. So let’s run through the steps which I believe are beneficial for all parties.
1. The owner will normally make contact with the property manager or the agency and ask for a market valuation. It’s important to ascertain what the purpose of the valuation is for:
An owner will rarely just ask for a market valuation for the sake of it, generally there is an underlying reason, so ask lots of questions and find out their motivation.
2. If the owners are asking for the market valuation because it is their intention to sell the investment property, then the next step is to make contact with the tenant to inspect the property.
3. During this inspection take the time to have a chat with the tenants. You never know, perhaps they are interested in purchasing the property.
4. During this appointment it’s imperative that you work on establishing some rapport with the tenants to gain their confidence that you will work hard to avoid inconveniencing them any more than is absolutely necessary.
5. The owner/property manager and sales agent must decide what type of sales campaign they will be running. Will it be sold at auction or by private sale? The tenant should be informed of this decision and also given the timeframes for the campaign.
6. Will there be set open times every weekend? On Saturday and Sunday? How many Open for Inspections will be conducted each week? Again the tenants need to be involved with these decisions.
7. What happens if the property is slow to sell? How long will you keep the property on the market for?
Keeping a house ‘spick and span’ at the best of times can be hard work, let alone through a sales campaign. So it’s a good idea to provide the tenant with a ‘thank you’ or incentive during the campaign. Maybe some movie tickets so that they can take the family out during an inspection.
Or even consider a reduction in rent over this period to compensate them or allow them to: