Selling your investment property is different than selling your primary home. Read on to find out your responsibilities as a landlord and get tips on getting the maximum money for your property.
Selling Your Investment Property: Tenant Rights & Obligations
• If your tenant is in a lease, the tenant has a right to stay under the Ontario Landlord & Tenant Act. It doesn’t matter if a new owner wants to move in, the lease obligations transfer to the new owner until the end of the lease term.
• If the tenant is month-to-month, the new owner may move into their space. Minimum 60 days written notice (from the first of the month) must be provided and the new owner must occupy the space themselves (or rent it to a family member) – they can’t simply kick the tenant out and rent it to someone else.
• Tenant Cooperation – Provided 24-hour notice has been provided to the Tenant, they must cooperate with the Landlord for showings (whether they are in a lease or not). They can not insist that they must be home for showings. If they do not, the Seller can claim damages and/or proceed with an eviction.
When Should You Sell an Investment Property? Timing Considerations
When should list your tenanted property for sale? Should you list it while your tenant has a lease in place, at the end of their lease or wait until they give notice that they are leaving? Timing the sale of your investment property depends on a few factors:
• Your Target Buyer: If your target Buyer is an investor, the fact that there’s a tenant already in place, and a known rate of return may be a benefit to the Buyer. Of course, if you aren’t charging your tenant market rent, that will be a deterrent to investors. If your target Buyer is an end-user (in other words, someone who will move into the unit themselves), then you’ll want to time the listing of the property towards the end of their lease. Remember that once an agreement of purchase is in place, you can provide 60 days notice to the tenant (from the 1st of the month) on behalf of the new Buyer, if they (or their immediate family member) will be moving into it. For example, if the lease ends on July 1st, you could give notice on behalf of a new Buyer as late as May 1st. If condos in your building take an average of 30 days to sell, then you’d probably want to target a listing date of April 1st. That way, if your tenant is in a month-to-month lease, you’ll be able to target effectively both investors and end users.
• Your Goals: Your personal financial goals need to be considered when timing the sale of an investment property. Do you need the equity for other purposes? Is your mortgage up for renewal
How would your taxes be affected by a sale?
• The Market: What’s happening in the real estate market? Are values in your building or neighbourhood increasing or decreasing? Should you lock in your returns and move on? What’s happening to interest rates?
Keep in mind that under the Ontario Landlord & Tenant Act, you cannot ask your tenant to leave because you want to sell, if they are in a lease OR if they are month-to-month tenants. If you wait until your tenant gives notice before selling your property, you could be waiting for years.
Check in next week where we discuss staging and marketing your investment property!
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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