Selling Your Rental Property? Work with Your Tenants!

There comes a point in every Landlord’s career where they decide to cash in on their investment property. Typically, a landlord will rent the property for years, allowing a tenant to pay down the mortgage. Once a good chunk of the mortgage has been paid off, it makes sense to sell, cash in on the equity, and either upgrade to another property or use the earnings for another purpose. If this describes you, then you should be mindful of leveraging your tenant relationship to reach a profitable sale of your home. Believe it or not, your tenant may be the deciding factor that makes or breaks the entire process.

Ideally, you should be open and communicate clearly to your tenant throughout this process. Your tenant is living in the space, which means they have a lot of control over how presentable the space is throughout the showing process. If you have a strained relationship with the tenant, they may take petty measures to make the home unpresentable prior to a showing. This is the last thing you want, as it will devalue your home in the eyes of the potential buyer.

In preventing any ill feelings on your tenant’s part, let them know that you plan to sell, and that you’ve appreciated their tenancy. Give them a rough timeline estimate so that they have adequate time to search for a new living space, should it be required. You may also consider some sort of incentive in asking for their help with keeping the space presentable. The incentive can be up to you; gift cards and cash incentives, for example, can go a long way.

Typically, you’ll need to provide your tenant with a written notice of entry 24 hours prior to the date and time of the showing. In addition to this, it’s recommended to simply give your tenant a call with specific details; a personal touch can go a long way in maintaining a healthy landlord/tenant relationship.

In addition, you’ll want to be respectful and sensitive towards your tenant’s privacy. For example, some tenants may have concerns about personal belongings and hanging pictures to be included in any marketing material (i.e. Realtor.ca listings). If this is the case, you should coordinate a photo shoot with your tenant so that they can remove pictures from the walls and hide any personal belongings that they’d like to remain hidden from the public eye.

You’ll also need to consider admittance; the Residential Tenancy Act only permits admittance between the hours of 8am and 8pm if it’s not an emergency (and no, a showing is not an emergency). So, don’t go planning any showings for 6am or 10pm etc. Your tenant will not thank you, and you may end up in some hot water.

Here’s another big one: Pets. Does your tenant have one? Two? More? Some potential buyers may not take kindly to pets living in the space they are considering purchasing. This is another big reason why healthy tenant relationships are key. You may need to request that the pets are hidden from site during showings. This may require your tenant to find a babysitter, take the pets out during the showing time, or arrange some sort of hidden space that will not be shown to the prospective buyer.

You’ll also need to discuss with the tenant whether they plan to stay in the living space or not. Contrary to popular belief, you cannot force a tenant to move out on a whim if you have an offer on the table. You will be left to negotiate with your tenant and the buyer. If you have a lease term signed off, the tenant is within their rights to stay, and the buyer will need to be made aware if they plan to. If you do not have an active lease term, then the buyer is able to provide the tenant with an N12 form, which will give the tenant 60 days to move out. With that said, if the tenant doesn’t move out, the eviction process can typically take quite some time. What’s more, is the standard Agreement of Purchase and Sale guarantees vacant possession. You will need to discuss with your Realtor if this stipulation is included. If so, you will be wise to consider leaving enough time to evict if need be. Otherwise, you may end up in direct breach of your purchase agreement.

With these factors to consider, failing to leverage your tenant relationship can be costly in more ways than one. The wise move, is to maintain healthy relationships with your tenants from the start, and to play the right cards when it comes time to sell. A tenant on your side, will make the process a breeze.