Selling house with tenants

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dino

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Hi folks,
I'm thinking of selling my house in a large town but I currently have it rented to an oriental family. I'm wondering should I advertise the house as an investment property with the tenents in situ or should I ask them to leave, do some minor decoration and advertise the house. The tenants are very good and they pay decent rental.
Just wondering if I anyone has had similar experiences.
 
Re: Selling house with tenents

It's relatively unusual to sell residential property as investment property with sitting tenants - most buyers will want vacant possession. And while it may be possible, there are two key reasons that it's not a great idea:
(1) The realisable value will be closely related to current return, and an investor will seek to maximise the % return - which means they'll key the capital payment to the current rent. Many investors will also be nervous of having sitting tenants they haven't vetted themselves, and may want more than usual detail on tenancy agreements, reliability of rental payments, maintenance costs, and so on.
(2) You're limiting your market to the investment sector only (at a time when lots of investors are risk-shy), which reduces your chances of getting a high price. The more potential bidders the better the price, generally.

You'll probably do better - unfortunately for your tenants - if you give them notice, freshen the place up, and then put it on the market. Just be sure you give at least the full notice required under the terms of the tenancy agreement or relevant legislation.
 
Re: Selling house with tenents

I dunno.

Sometimes you might get an invesor who is looking or a house with sitting tenants. If they are good tenants and paying decent rent, then new owner is spared the hassle of seeking fresh tenants and redecorating/refurnishing.
 
Re: Selling house with tenents

I'm just after putting a house on the market, in a great location. I'm selling it because I want to buy a commercial property and I gave the tenants notice. They were fantastic tenants and I feel I've made the wrong decision because the market is slow at the moment and I'm probably going to end up renting it out again. I know sometimes having tenants can be offputting for purchasers but if its not going to sell, I'd consider leaving them there.
 
Re: Selling house with tenents

I would think it depends on how much notice you are required to give and where Part 4 Tenancy does not apply.

AFAIK if under two years occupancy the notice period is 42 days? (unless you have agreed a specified time in the lease)

As you're generally looking at over a month to close a sale, you could always give any potential buyers the option of either vacant possession or with tenants.

This will cover your own repayments while waiting for a sale.

Obviously you would need to keep the tenants in the know, but if they're happy in the property, they might be willing to take the chance that the new owner will rent to them.

If the new owner wants to occupy the property, they should have plenty of time to re-locate prior to closing the sale.
 
Re: Selling house with tenents

dribbs said:
I'm just after putting a house on the market, in a great location. I'm selling it because I want to buy a commercial property and I gave the tenants notice. They were fantastic tenants and I feel I've made the wrong decision because the market is slow at the moment and I'm probably going to end up renting it out again.
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I think you might need to be careful here with renting it out again. If the previous tenant sees the property going back up for rent then that means they were evicted needlessly. I'd imagine they would be perfectly within their rights to report this to the PRTB.
 
Re: Selling house with tenents

Afuera said:
I think you might need to be careful here with renting it out again. If the previous tenant sees the property going back up for rent then that means they were evicted needlessly. I'd imagine they would be perfectly within their rights to report this to the PRTB.
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I don't see why - they weren't evicted needlessly if they were given notice because of a genuine intention to sell. The house has been on the market: it's not a case where someone has said "I'm going to sell" and got new tenants in a week later - if it were such, I'd say the owner would deserve to have the book thrown at him/her [preferably the Encyclopaedia Britannica, all volumes at once], but I'd be very surprised if the PRTB would intervene in a case of genuine attempt and failure to sell.
 
It is hard to say whether to sell with sitting tennant,if you do go ahead with it you can still get your rent while the property is on the market,but your market is limited to investors who will want to see a deal that stacks up. Ask yourself, would you buy this deal at the price your selling for?if not the chances of getting an investor to buy are slim.
 
Thanks for all the advice. I think I'll probably have to ask the tenants to move out. As an investment property it's probably no a great financial return. I get €900 rent per month and the market value of the house is about €315 to €330,000 according to local estate agents. The system works okay for me because I bought the house cheap. I'm only selling it to reduce the mortgage to a manageable level on my PPR.
 
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