Should you sell your investment property Tenant Occupied or Vacant?

[Alan Asriants]

This is a question I get all the time from investors, and let me start out by saying that I almost exclusively deal with residential Real Estate. This is usually Single Family or 2-4 unit Buildings

To these sellers, I will always say: keep at least one unit vacant before selling if you can.

Most Buyers are looking for a place to live, not an investment property - especially if you are selling a single family home. A prospective Buyer is likely looking for a place to move in with their family, and if you have a long term tenant in place with no future vacate date, then you are really limiting your buyer pool, and effectively running down your sales price. 

This is also true of small multi family. Having one unit vacant or coming to a lease end date is a great way to attract more buyer to your listing.  

On top of that it makes showing the space a lot easier. Not all tenants are easy to deal with, especially those who know that they might get the boot once a new investor comes in. Having the space vacant relieves you of having those uncomfortable convos with your tenant, not being able to schedule showings at times convenient for a Buyer, etc. 

Plus, lets be real, not all tenants keep the place as tidy as you would like when it came to selling. Having a vacant unit/vacant home allows you to freshen it up before sale, giving you a better ROI.

Tenants sometimes thinking they are trying to act in their best interest, can bad mouth a property and scare some buyers away. (pro tip - asking tenants questions about the place is a great way to gauge the problems of the home and a good perspective on how it might be dealing with that tenant)

You'll be happy you put the home on the market vacant than trying to schedule appointments and dealing with a tenant. 

Here is a visualization. You are selling your car but you rent it on Turo pretty often. Someone calls you to check out the car, but its booked out for the week. You agree to meet them 1 week later. Some can see it then, others can't. When the rental period is over, the car is dirty, has a funny smell, and there's a small new ding. 

Would you have been able to sell the car better and for more had you kept it in your garage and detailed it?