Buyers/exchangers are also human beings. We
as a specie make judgments emotionally as well as factually.
Your tenants can have a significant impact on the price you
achieve on the sale of your investment property.
Suggestions vary radically from size to type to value, but
ideas for your consideration are:
Advise tenants of your plans. If
interior inspections will be necessary or advantageous
during your marketing, arrange for their cooperation and
(have your agent) work with them on best times and days.
Tenants generally object to intrusion in their personal
or professional space for security, convenience, and
privacy reasons. Provide them with form to acknowledge
their responsibility for their personal property. Advise
them that agent and/or property manager will be present
for all showings and inspections. It may be worth your
while to arrange a “Cash for Coop-
eration” plan with your tenants, under which you will
reward their cooperation at close of escrow with a
stipend of $X for their help and cooperation. This can
also stem obstacles they might create.
Invite tenants to advise you of
problems. Fix, repair where reasonable. Reassure
tenants with fact that the better the property the
better will be the buyer it attracts, which will mean a
good environment for them.
Be sure your rental agreements/leases
are up to date. If a tenant decides to move rather than
endure the selling process, this may give you an
opportunity to create a “model” unit or replace him with
a better tenant and rent.
Recognize that problems cost money
during a sale. Your options are to pay for it up front
or through the price. Now allows you to choose resources
and costs more independently. Document. Document.
Tenants are a valuable element of
investment properties. Good tenants are very valuable, and
good tenants are often a result of landlord-tenant or
manager-tenant communication. Tenants in properties for sale
are often skittish and even antagonistic, fearing rising
rents, new judgments, and not liking having their
“home” invaded for the purposes of the transaction. A savvy
landlord/seller may have managed this prior to marketing by
arranging incentives for tenant cooperation, but a buyer
gets what he gets.
During the escrow process the buyer
certainly makes decisions about the property and the
tenants. Make immediate communication with the tenants
when the transaction closes.
Unless tenants are on continuing
leases, rather than 30-day month-to-month rentals, most
buyer landlords are wise to put their own documents in
place with the tenants. Managers or owners can do this,
but at least one face-to-face between owner and tenant
generally makes tenants more comfortable.
Improvements the new landlord considers
advisable are important to tenants. During
investigations, tenants who have complaints are likely
to have voiced them, opening doors to resolution or
removal. Very often owners of multiple units have
repairs/remodeling done one unit at a time to maintain
the occupancy and income.
Having an experienced property manager
who is both savvy in tenant practice and familiar with
rental laws can be a dollar-wise decision. However, the
internet has made a lot of information easily
accessible, and landlord-tenant legal specialists are a
great resource. One helpful resource is Kimball, Tirey &
St.John LLP (www.ktwlaw.com).
They have a monthly email of landlord-tenant Q&A
information that is very helpful.