When selling a condominium, existing tenants are rarely a plus. If buyers want to use property themselves, an existing tenant can quickly become an exclusion criterion and also take capital investors from badly or cheaply rented apartments rather distance. There are quite a few possibilities to get the tenant on the boat, so to speak, and to make him a partner and ally in selling the property.
Especially in the big cities this may be a stimulus theme, but there are situations where rented apartments have to be sold. The tenant protection in Germany is one of the most regulated regulations, so that a tenant can not be dismissed even with good reasons.
Roughen the tenant – pay compensation
A simple and mutually agreeable way is if the seller pays the tenant a kind of compensation, as long as this is looking for another apartment. Removals are expensive, so the financial incentive should exceed the relocation costs to be attractive to the tenant. The faster the tenant moves out, the sooner the apartment can be sold as a leased property. It is therefore appropriate to offer the tenant the compensation in the form of a relay. When moving out within 2 months eg 7,000 euros, within 3 months 6,500 euros and within 3 months 6,000 euros. If the tenant first enters into the offer in principle, the move will not be long in coming. This creates a win-win situation, which benefits owners and tenants alike.
Under certain circumstances, the new buyer can accept the compensation payment directly and thus also the risk that the tenant does not move out.
From tenant to buyer
The fewest tenants are aware that they could afford to buy their rented apartment. Although the current extremely favorable interest rate is being advertised intensively by numerous credit institutions, the acquisition of residential property is not enough for many tenants in their personal focus. Here, it is useful to present the tenant in black and white how the monthly charge for the purchase of the apartment is compared to the current rent. If the tenants first realize that it is quite in the range of their personal possibilities to acquire “their” apartment, many are interested in the acquisition. In any case, the tenant may have a right of first refusal when selling. This applies until he has assured the broker that there is no interest in the acquisition. A reference to this preemption right may be an additional incentive – who does not like to be one of the privileged.
From tenant to intermediary
If the tenant has proven credible that there is no way of acquiring or not interested in it, he can be brought into the boat in another way. The tenant is usually interested in a good and uncomplicated relationship with the owner. Why not give him the opportunity to look for a suitable buyer himself in the circle of friends and acquaintances? In this way, the tenant feels as a partner and does not pass by.
Find an external buyer
If the mentioned possibilities exist to integrate the tenant directly into the business, then starts for the broker the search for an external buyer. It is then necessary to find the interested parties for whom the existing tenants are an advantage. For example, a long-term rented apartment with regular paying tenants can be of interest to small (private) investors, because the security of the return is more important for them than a higher one. I’d recommend finding real estate agents to sell your property instead of fussing your head and advertising on platforms, that’s purely a waste of time and money. Finally, new and reliable tenants must be found first. A cheaper purchase price than a resident property is a further incentive for some prospective buyers. If rent increases are long overdue, the buyer also has the possibility to improve the yield without having to forego the safe rental income.
Make the tenant an ally
A cross-border tenant can become a significant problem for selling a property. The above-mentioned possibilities to involve the tenant or to make it an advantage for the acquirer help to create a positive mood in which the tenant does not feel pushed and put under pressure. Thus, a cross-shooting can be prevented in many cases – for the benefit of all parties involved.
What experience do you have as a broker with the sale of rented properties? Do you offer your clients “letting talks”?