Should I Sell My South Australian Rental Property Tenanted or Vacant?

There has never been a better time to sell property in South Australia, with the market offering incredible opportunities for vendors right now.

But if you’re an investor, it’s not as straightforward as simply deciding to put your house on the market.

There are unique tax implications, as well as legal considerations.

But besides these things—which can often be handled by a good accountant—there’s one big question you need to answer: should you go ahead and sell with tenants in place or wait until the property is vacant?

Both options have their advantages and challenges, so understanding what’s right for you requires careful consideration.

Here we explore the pros and cons to help you make an informed decision and choose the best approach for your investment property.

What does it actually mean to sell tenanted vs. vacant?

To begin, let’s clarify what each option means.

Selling a tenanted property involves keeping your current tenants in place until the sale is completed, transferring their lease to the new owner who then takes on the responsibilities of a landlord.

This can be particularly appealing to other investors looking for an income-generating asset right off the bat.

On the other hand, selling a vacant property means the home is empty, giving the new buyer immediate possession.

This option can also attract investors, but also opens up the pool to include those looking for a home to live in themselves.

As Kate Barnett, Director at We Connect Property explains, "the question is really about who you want to attract as a buyer.

“If you’re targeting investors, having a tenant in place can be a selling point as they love the security of existing tenants and an instant income stream.

But if you’re after a wider pool of buyers, including families or owner-occupiers, vacant might be the way to go because they’re likely to want immediate access to the home.”

So the choice between tenanted and vacant often hinges on the type of property you’re selling, who you’re selling to and what appeals most to them.

The pros and cons of selling a tenanted property

If you're considering selling your investment property with tenants in place, it’s essential to weigh up all the advantages and disadvantages.

Selling a property with tenants in place can make the process smoother for landlords who want to avoid a gap in rental income. However, it’s not without its challenges.

Let’s take a closer look at what selling a tenanted property entails.

Pros of selling tenanted:

Immediate rental income: Many investors are typically keen on properties with tenants because they appreciate the security of knowing the property will start generating cash flow from day one. This can be a big selling point in today’s market.
Lower vacancy risk: An established, responsible tenant is a valuable asset. So since tenants are already in place, it saves investor buyers the hassle of finding new tenants.
Stable presentation: A well-maintained, tenanted property shows potential buyers how the property functions day-to-day, which can be a plus for those eyeing the home purely as an investment.

One of the biggest perks of selling a tenanted property is the immediate rental income it offers to buyers.

“Investors often see this as a safety net,” Kate explains, “because they know the property is already generating revenue. It removes that risk of vacancy after the sale.”

An occupied property also avoids the typical vacancy periods that come with switching tenants, making it particularly attractive to long-term investors.

Cons of selling tenanted:

Limited buyer pool: When you sell with tenants, you’re primarily marketing the property to investors, limiting your potential market compared to a vacant property, which appeals to both investors and owner-occupiers. Owner-occupiers often prefer vacant properties where they can move in as soon as the property settles.
Inspection challenges: Scheduling open houses and inspections can be more difficult with tenants in place. Tenants may not always cooperate, and the property might not always be presented in its best light.
Potential tenant disruption: Even with the best tenants, selling a property can cause friction. Tenants might be concerned about their future and may resist frequent inspections during the sale process.

It’s true. Managing open houses and inspections can be tricky when tenants are living in the home.

“Not every tenant is thrilled about regular inspections,” Kate warns.

“We’ve also seen situations where tenants haven’t prepared the home for viewings, or have been particularly difficult or disruptive during the sales process, and that can definitely hurt your sale.”

In South Australia, landlords must also comply with specific regulations when selling tenanted properties.

For instance, you need to provide proper notice for inspections and respect the tenant’s right to quiet enjoyment of the property.

Any breaches could result in legal issues or strained relationships.

"Managing a sale with tenants can be challenging,” says Kate, “so it’s important to remember that you are navigating both a sale and a relationship.

“It’s crucial to ensure tenants feel comfortable with the process, as their cooperation can make or break a successful sale. Good communication is vital, and that’s where having a skilled agent—who is experienced in managing tenant and vendor expectations—can really help."

The pros and cons of selling a vacant property

On the other hand, selling a vacant property can offer far more flexibility when it comes to the presentation and marketing of your property—the home can be staged and shown to its full potential—but it comes with its own set of challenges, particularly the financial burden of losing rental income while the property is on the market.

Here’s what you need to know about selling a vacant investment property.

Pros of selling vacant:

Broader buyer appeal: A vacant property doesn’t just attract investors; it also appeals to owner-occupiers who need immediate possession, significantly broadening your potential buyer pool. This can lead to more interest, higher competition among buyers and, ultimately, a faster and more profitable sale.
Flexibility with inspections: Without tenants, you have full control over when and how the property is presented. You can freely stage the home, highlight its best features, schedule more flexible open houses and ensure the property looks its best for every viewing. This can increase the property's appeal, particularly to owner-occupiers who are looking for a clean slate.
Potential for better offers: With no tenants, owner-occupiers—who are often more emotionally driven than investors—might be more willing to pay a premium for the property, especially if it’s move-in ready.

“Vacant properties tend to sell faster because they’re easier to access and present well,” Kate explains.

“This makes them more attractive to owner-occupiers who want to move in right away, broadening your potential buyer pool.”

Cons of selling vacant:

Lost rental income: One of the biggest drawbacks is the financial gap you’ll experience during the sales period. You’ll lose rental income while the property sits on the market, which could impact your cash flow if the sale takes time. So the question becomes: are you in a position to forego rental income while the property is vacant and up for sale? If not, selling with tenants could be more financially sound.
Increased holding costs: With no tenants paying rent, you’ll be responsible for all ongoing costs like utilities and maintenance, which can blow out quickly.

“I always remind clients that vacancy comes with a cost,” says Kate.

“Not only are you losing rent, but you also need to budget for the potential costs of maintaining the property while it’s on the market —these additional expenses can be significant, especially in a slower market where properties take longer to sell.”

So while selling vacant certainly comes with more flexibility, it’s essential to be prepared for months without rental income and to keep a financial buffer in mind.

So what’s the right choice for you?

Deciding between selling your property tenanted or vacant ultimately comes down to your unique situation, and depends on several factors, including your financial situation, your tenants and the type of buyer you want to attract.

Factors like market demand, your financial circumstances, and your tenants’ cooperation will all play a role.

If your tenants are cooperative and your property is located in a high-demand area for investors, selling with tenants might be the smoothest option.

But if you’re aiming for a broader market appeal, especially to owner-occupiers, selling vacant could give you a competitive edge.

“The key is to think about your end goal,” Kate advises.

“Are you more focused on a quick sale, or do you want to maximise your return over time? And, most importantly, how flexible are you with your finances if the property stays on the market longer than expected?”

These questions can help guide your decision, ensuring that it aligns with your investment strategy and financial goals.

And don’t forget the legal stuff either.

In South Australia, if you decide to sell vacant and end a lease early, it’s crucial to comply with any mandatory notice periods to ensure all parties are treated fairly during the transition and to avoid any unnecessary complications.

What role can a real estate agent play?

Selling an investment property, whether tenanted or vacant, can be a complex process.

Both options come with their own set of pros and cons, but the key is to carefully evaluate what will work best for your investment.

This is where having an experienced real estate agent by your side—one who understands the unique challenges of selling investment properties—can make all the difference.

From managing tenant relationships to marketing your property to the right buyers, good agents understand the nuances of selling investment properties and can ensure a smoother, stress-free and, ultimately, more successful sale.

“At We Connect Property, we specialise in handling these kinds of sales,” Kate says.

“Because our agency also handles Property Management in-house, we know how to balance tenant needs with maximising property value, and will help position your property to achieve the best outcome.”

And if you're still unsure about the best approach for your investment property?

Reach out to We Connect Property. Our team is ready and waiting to provide the expert guidance and advice you need!

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If you’d like some expert guidance and support, we’re ready and waiting to help.

As property experts with over 21+ years combined experience in buying, selling and managing property in Adelaide, We Connect Property are ready and waiting to offer expert guidance and support when you need it most, and can answer all your questions about leasing your investment property.

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DISCLAIMER: All recommendations made by We Connect Property are general in nature and not to be relied upon as legal or financial advice. To ensure accuracy, we always strongly recommend seeking independent, professional advice tailored to your specific situation before making any investment or financial decisions.