Question for Selling a Townhome with a Tenant

Buying & Selling Real Estate
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Question for Selling a Townhome with a Tenant

Kyle Vogeler
Rental Property Investor · Emmaus, PA · Member since 2021 · 153 posts · 85 votes

I currently have a townhome that has a tenant living in it that I am considering selling. My question to you all is: Is it wise to list the property with a tenant living in it? Or will that affect the sale price?

This tenant pays their rent on time and isn't ever an issue, but it is time I utilize the equity I have built over the years. 


Thank you all in advanced for your responses. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    1y
    Quote from @Kyle Vogeler:

    Like most questions in real estate, it depends.

    Will the tenant be responsive to showing requests? Do they keep the home well? Are they renting at market rate, or is their rent low?

    In most cases, it's best to have the unit vacant. This opens it up for buyers wanting to occupy and investors wanting to do renovations or place their own tenant. You also won't have to coordinate showings with the tenant, which can often be problematic.

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  • Kyle Vogeler
    OP
    Rental Property Investor · Emmaus, PA · Member since 2021 · 153 posts · 85 votes
    1y

    Thanks for the response. Based on what you said, I think it would be best to have the property vacant before selling. The rent is slightly below market rent so investors would likely want to raise rents/find a new tenant.

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  • Lindsay DavisBusiness Member
    Real Estate Broker · Birmingham, AL · Member since 2019 · 327 posts · 203 votes
    1y

    @Kyle Vogeler,

    Like many things, it depends. If your townhome is in a neighborhood where a large percentage of folks are homeowners (meaning that most of your offers will be made by prospective owner-occupants as well), then a rental with a tenant in-place could sell at a discount, or take a little longer to offload.

    However, if you’re mostly fielding offers from investors, then selling a fully-leased rental could actually be beneficial, since the investor closing on the property will get cash flow from day one. Plus, you can even share your bank statements and P&L to show that your tenant always paid on time. I’m pretty sure you’d have investors who would be very interested in that.

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