Wait For Tenants To Leave Before Listing House For Sale?

[Stephen E.]

So I have this beautiful house but it doesn't get enough of a return on rentals so I've decided to sell it and invest somewhere with better cash flow. I already have great pictures of the house so I don't need any help with that. The tenants are nice so I would be able to show it while they are there. At the same time, I know it's better to show a house that is empty.

I'm worried if I am unable to sell it, because it has tenants until October, then on Trulia, etc. it'll say "listed for 30 days" and that will make the house less attractive.

It's a beautiful residence, not a good fit for an investor, so the people looking at the house would almost certainly be people who intended to live there.

[David Krebsbach]

@Stephen E.You're facing two of the oldest, yet most concerning issues when selling rental property - 1) Tenant-occupied vs. vacant, and 2) List with a Realtor (full or limited service) or FSBO. These are often difficult choices because all have some merit, but different costs. In any specific situation you can't know which will end up providing the best return (in terms of time, effort and/or money).

But, since you've brought up a good topic for discussion, I'll throw my two cents worth into the mix...

1a) Tenant-occupied offers continued rental income while trying to sell. Vacancies are costly. In fact, vacancy and tenant damage are two of the largest fears of most investors. So, continued income avoids one of those big fears, and is, therefore, an attractive option. And, the longer it takes to sell, the greater the financial impact of continued rental income vs. vacancy becomes.

1b) On the other hand, vacant properties put the owner if full control of how the property shows. No concerns about the tenant mess (after all, they're moving). No concerns about tenant apathy toward the property, toward the landlord/PM, or stepping out during showings. And tenants will express themselves to potential buyers, so you want them to step out.

2a) MLS-listed properties will get maximum marketing exposure. Yes, you can do much of this on your own, but even if you have the time and know-how, you don't have the online syndication agreements that will multiply the marketing reach. Retail marketing tends to attract retail buyers. DIY sellers tend to attract DIY buyers - both looking to save money. If you are really good at it, go for it! If not, hire those who are. But, hire a good one. Here are some examples why...

a. A good tax accountant will save you more than they cost you
b. A good attorney is more likely to get you a better outcome
c. A good smoke detector is more likely to save you, your family, or tenants' lives

All investors should nurture strong relationships with Realtors, lenders, title companies, etc. so you will have every alternative available to you if/when needed. If any of these services fail, it won’t matter how much money you saved.

2b) FSBO clearly offers to be the low-cost alternative. Although, it probably has the widest range of end results (from good to not-so-good). Stats commonly bear this out, so it depends a lot on who you are and how good you are at things other than investing, rehabbing, renting, managing, etc.

BOTTOM LINE:
Many things in life come down to three foundational concepts - Time vs. Cost vs. Quality. But, each tugs away at the others. At best, you can have two, but not all three (unless you balance them equally). When facing difficult choices, first identify your priorities. Rank each of them (honestly) in their importance to you. Then your difficult choices will become clearer, if not obvious.