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Tenants & Selling A Property

Discussion in 'Real Estate' started by Chris C, 18th Jun, 2009.

  1. Chris C

    Chris C Well-Known Member

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    My investment partner and I are tossing up putting up our IP for sale again at the end of August given that our 12 month ownership of the property will have occurred and we then be able to sell it with the 50% discount on the capital gains.

    However our tenants lease expires in July and at this stage they aren't looking to renew though would consider a monthly lease if we offer a discount, so I was wondering what are people's general opinion and experience of selling a property without tenants vs selling a property with tenants? Is it reasonable to expect a better sale price when selling without tenants?
     
  2. Jacque

    Jacque Team InvestEd

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    Hi Chris

    It really depends on the tenants- if they're neat, clean and willing to have opens or such to sell the property. I'd offer a discount on rent as an incentive during the marketing campaign, especially if they're willing to allow wider access than just a couple of OFI's a week.

    Vacant properties can also look pretty sad, so if you're keen on doing it this way (sans tenants) then consider putting some basic furniture in.

    Best of luck with it all- didn't you get any good offers up until now?
     
  3. Chris C

    Chris C Well-Known Member

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    We took it off the market back in April or May, we got an offer for $590K, I told the REA to go back and get a better original offer before we'd start negotiating. They weren't interested in offering again...

    :p

    That said we both learned a lot last time around (it was the first time either of us tried to sell a house) so it was quite a learning experience.

    Last time we had the house on the market looking for good offers more as a feeler than a genuine need to sell. This time around with the 50% CGT reduction I think we'll be much more negotiable, and I think both of us are now looking at locking in profits while there is still a general feeling of this being a light recession...

    :rolleyes:

    Plus I think the recent interest rate moves really spooked my investment partner, I have been telling him for weeks that it was bound to happen, and now that it is actually happening I think he is starting to see the light!
     
  4. TryHard

    TryHard Well-Known Member

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    Hi Chris

    I agree with Jacque ... we've previously sold in similar situation and it can be difficult ...

    Not sure where (if?) in the Brisbane market the IP is, but it's far from a seller's market. If you got offered $590K previously you might expect worse in the current market :( .... However, if the recent movement in interest rates 'spooked' your investment partner enough to force a major decision, they possibly aren't the best partner to be tied into an investment with.

    But if you're dead keen to sell, unless you have one-in-a-million tenants, I'd to bite the bullet and have the tenants vacate, then fully clean / re-paint whatever is needed, and put a furniture package in the place. When we have tried to sell while tenanted, it makes it really hard to know how or what you're presenting, extra hassle for inspections and open house, and no matter how good they are it will never look it's best ... selling unfurnished we found caused people to make lowball offers because the place feels like it should be bought cheap :( ... the same place with a furniture package in it we were offered 20% more than the previous best.

    Also make sure the agent brings all offers to you on paper. Some seem to have reverted to kicking around numbers verbally and I think that can work out pretty badly for the seller. Very hard to go back for more when it's a phone exchange, and the buyer doesn't feel that sense of being on paper and maybe nearly being the owner, when they are more likely to countersign an increased purchase price, in my experience. It takes a pretty savvy agent to get the best offer out of a buyer in this market, in my experience.

    But if you can hold on and talk sense to your investment partner and trust they will support the deal for a few more years, I would have thought you'd both be looking at a better outcome.

    Have fun
    Carl
     
  5. Chris C

    Chris C Well-Known Member

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    Thanks for the feedback.

    LOL I'm glad my IP partner got spooked, because I personally have been spooked for months. If it was up to me alone, this place would have sold last November when we had a very interested buyer that approached us without the place being listed.

    Anyway, in regards to the furniture packages, what do these normally cost? are who are some good suppliers? Also should the entire home be furnished? or just selected areas? Any good pointers here...
     
  6. Jacque

    Jacque Team InvestEd

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    Hey Carl

    Nice to hear from you again- I think its been a while :)

    Chris,

    Carl makes some valid points and furniture really is vital when selling. Not all vendors agree, and it does depend on the size of the property but I'd usually ensure that at least the living areas as minimum are furnished and the main bedroom. Try to also create an outdoor living space with chairs, umbrella etc if there's the room. If you don't have access to the furniture, look up some hire companies and obtain some prices. Most rent packages out at monthly rates and prices vary, depending on the level of service required. I'm not familiar with Brisbane companies but try the Yellow Pages and let us know how you get on!
     
  7. TryHard

    TryHard Well-Known Member

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    Hey Jax, yeah been a while ... just need that time to do the 2-finger typing thing :)

    Chris_C ... must admit I have never used the package people myself - last time we furnished it using our own stuff.

    And if it was me in this climate I'd go to the auctions and get a dining table and chairs, L shaped plush looking lounge, 2-3 beds for the bedrooms, some rugs, flat screen telly, laundry stuff etc.

    We went to an auction for a place that eventually went for $1.35M, and the flat screen telly was cardboard, it took a while for me to pick it though. Lots of tricks out there to present places correctly :p

    From memory the average package might be $800-$1,200 per month (and you'd likely make that back anyway at sale time) At the auctions you might pay $2K for the whole lot, but then you could probably re-sell it on eBay for what you paid :) And if you don't, you probably still creamed the profit :D
     
  8. TryHard

    TryHard Well-Known Member

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    I should have recognised/mentioned it all depends on your LVR and current financial situation. It seems like a terrible time to sell in my opinion, but that is based on my selfish view of the world. (and if any financial institution would lend me some dough, I'd probably buy your place :) )
     
  9. Chris C

    Chris C Well-Known Member

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    Well feel free to do some shopping around for lenders because I'm the sort of generous guy that would let you buy it off me! I know I would definitely prefer not to pay the 2.5% REA commission...

    :D

    If anyone is interested (I don't know if I'm allowed to advertise, but...) it's currently renting for $600/week, so at 100% LVR on commonwealth's 5.04% standard variable rate has it grossly positively geared up to $620,000!

    1500m from the city, 4 bed townhouse, nice polished floors, body corp only $600/year (yes you read right, $600 a year!) and I think its only 7 or 8 years old! As far as great IP's go this is as good as it gets!

    :eek:

    I'd even put in a cardboard flatscreen for you when you went to inspect it. Or better yet, I'd leave the tenants in it for you!

    :rolleyes:
     
  10. Jacque

    Jacque Team InvestEd

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    Hehe Chris
    I'm surprised you still want to sell it seeing as it's costing you so little (or nothing, depending on your cash in) - why not wait until the market is a little better?
    Or... offer to sell it to Carl on vendor finance :D
     
  11. TryHard

    TryHard Well-Known Member

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    Just to be fair to my compatriates on InvestEd, don't offer to lend me money :) The guru R.Latham has just given final confirmation on the finance for our new PPOR ... Anyone who questions whether it is worth having a mortgage broker, trust me, it is, if they are a good (great!) one... I think I might lose the plot if I consider another half mill or so ... but I think I will cool down on the IP's for a while :)
     
    Last edited by a moderator: 22nd Jun, 2009
  12. Chris C

    Chris C Well-Known Member

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    Maybe I should head over to Somersoft to see if there are any hardcore bulls rampaging for an IP while rates are still low.

    :D