I’ve come up with a non-scientific formula for my clients who have long term renters installed in a property they want to sell. The income you make on the rental will be deducted from the sale price you will eventually obtain when the property sells. For example–let’s say a $300,000 home is rented for $2,000/month. It takes twice as long to sell this property because it shows poorly and the tenants require 24-hour’s notice and access is limited. So if my area’s average day’s on market is 160, this property will sell in 8 months. 8 x 2000 = $16,000. I guarantee the sellers will get at least $16,000 less for the property than they would have if it were vacant, staged and easy to show. In a declining real estate market, these figures could look worse.
Unfortunately, many sellers can not afford to carry a vacant house. I understand this. However, the seller needs to understand that I am not a magician and can’t make their tenants clean their house and keep it in perfect showing condition at all times. Many tenants don’t want the property to sell and purposely make it difficult.
So, seller, the choice is yours. Either take the monthly income now and be prepared to receive less on the back end when the property sells, or wait until the tenant leaves, spruce up the home and give yourself the opportunity to sell for the highest amount of money possible.