Any time you have a property coming to the end of its lease and an owner thinking of selling
Any time you have a property coming to the end of its lease and an owner thinking of selling, the question inevitably comes up - do I leave the tenancy in place, or do I end it, tidy up (paint, carpet, lights etc.) and offer the property to market vacant?
Its a tough question, particularly given the fact that very often, the best commercial decision is to end the lease at its natural finish, put in that extra bit of effort and 9 times out of 10, reap a greater reward for those efforts. Now you might say wait a minute, aren’t there hordes of investors looking for property in Cairns? Wouldn’t they want to have a tenant already in place? Well, yes there are plenty of people keen to invest in Cairns, but equally (or more so) there are plenty of people looking for a home they can move into for themselves. And the people looking for a home rather than an investment are oftentimes also those more willing to pay a premium for that goldilocks home (juuuuuust right) compared to an investor going strictly by the numbers.
To give a recent example of this in action, I had a (tenanted) property go to market last month, lease in place for another 6 months, great tenants in place with good rent. Straight off the bat, we had a buyer submit a contract for $30,000 over the listed price on the basis of being able to move in before Christmas. Unfortunately in that case we couldnt make it work to their timing, but it certainly showed the difference that extra flexibility can make.
Now, while investors might get a bad rep, the fact is that many property owners DON’T just think commercially, with the care of the tenants also factoring highly (particularly long term, or those that have taken particular care of the home). I have equally seen owners that have entered into new leases prior to sale (to their own financial detriment) in order to guarantee security for that tenant for a further 12 months.
I like to strike a bit of a balance between the 2, with good communication with the tenants upfront, and an opportunity to determine not only whether a lease can be stretched a little to offer more house hunting time for an existing tenant, but whether the tenant is in fact a potential buyer. There are few phrases more welcome to an agent (or owner’s) ears than a tenant asking “can I just buy it instead?”