In the world of real estate investment, the saying "never sell real estate" is a common piece of advice offered by seasoned investors. However, what often goes unsaid is that this rule may not apply universally, especially if selling a property with tenants in place is not the right move for you. This is not relevant for those who purchased or refinanced in 2021 and find themselves in a unique position where renting out their house can cover double the mortgage payment. In this blog post, we will explore the cons associated with selling a property when tenants are in place, shedding light on important considerations for potential sellers.
Less Showing Times Available: One significant drawback of selling a property with tenants is the limited availability for showings. Tenants typically require ample notice, making it challenging to accommodate spontaneous or frequent property viewings. This limitation translates into missed opportunities, as a smaller window for showings means a reduced buyer pool. In a competitive real estate market, a smaller audience can potentially lead to a prolonged time on the market.
Timing Challenges: Having a lease in place that extends for more than a month or two can pose timing challenges when selling a property. Finding a buyer willing to wait for the lease to expire or assume the tenant's occupancy becomes a critical factor. The longer the lease, the smaller the pool of buyers who are both willing and financially capable of navigating such a situation. This constraint could lead to extended listing periods and potentially impact the final sale price.
Personalized Showing Spaces: When it comes to selling a property, the age-old advice is to depersonalize, deep clean, and declutter. However, when tenants are actively residing in the property, this advice becomes harder to implement. A home occupied by tenants, understandably, may not show as well as a vacant or staged property. The personalized touch of tenants' belongings can make it challenging for potential buyers to visualize themselves in the space, potentially slowing down the sales process. Studies have shown that vacant or staged properties tend to sell faster and for more money.
While the advice to "never sell real estate" is rooted in the potential long-term benefits of holding onto property, there are exceptions to every rule. For those considering selling with tenants in place, it's crucial to weigh the cons associated with this decision. From limited showing times and timing challenges to the personalized nature of occupied spaces, these factors can impact the speed and success of a property sale. As with any major financial decision, assessing individual circumstances and consulting with real estate professionals is key to making an informed choice. If you have experiences or thoughts on selling property with tenants, we'd love to hear from you in the comments below!