Is it easier or more difficult to sell an apartment with tenants?

[OneMoreFarang]

This question, like all my property questions, is about apartments in "old" high-rise condominiums in Bangkok. 

 

I want to buy a unit and not surprisingly prices vary. And some apartments for sale are empty and others have tenants.

Because I want to use it myself I prefer to buy an empty apartment. Then I can start renovating right away without delay.

 

What is the influence on the sales prices if tenants are in apartments? Do most owners think they can sell them more expensive because they sell an apartment with steady income? Or do most owners think it's better to sell an empty unit?

Or to say it in another way: If an empty unit is for sale for amount x. Is it more likely that the same unit with tenants would be sold for a higher or lower price?

[KhunLA]

Depends to who and why they are buying.  Along with what rent is presently being charged, and if way too low, then that tenant may no be wanted.

 

As a past RE investor, tenant or not wouldn't affect my decision, or price to be paid.  If out of state/province/country investor, with long lease tenant, then yes, would help if selling.

[ezzra]

The market is pretty much buyer's market where many more apartment for sale than buyers so it doesn't really matter much if you have a tenant or not... I have a good quality, good location apartment for sale in the center of BKK and it has been empty for a long while now and it seems that things will remain sluggish for some time to come...

[Peterw42]

I think its two separate markets, people are either buying to live in or buying as an investment. As an investor who wants a guaranteed return, an established long term tenant in place is worth paying more for.

As a seller, with a tenant in place, its limiting who the buyers are.

[david555]

Depends complete on the buyers intentions ....

[OneMoreFarang]

2 hours ago, david555 said:

Depends complete on the buyers intentions ....

That is (the opposite) of my point.

I personally want to live in a new place and this is why I prefer an empty unit.

 

But I buy something from a seller. And if a seller thinks he can sell (in average) a unit with tenant for a higher price than a unit without tenant then that is interesting information for me, the buyer.

[david555]

1 hour ago, OneMoreFarang said:

That is (the opposite) of my point.

I personally want to live in a new place and this is why I prefer an empty unit.

 

But I buy something from a seller. And if a seller thinks he can sell (in average) a unit with tenant for a higher price than a unit without tenant then that is interesting information for me, the buyer.

not the opposite ..... seems the same depending the target from buyer ,

 

 as

a) some wish to live in it themselves

 

b) buy for investment , ...or wish to keep example some time with renter to recover some money for  renovating later 

[KhunLA]

Depends where the 'market' is, and if old town Bkk, price wouldn't vary much, I wouldn't think, or expect it to.  Also depends on the building location, riverside or chinatown ish.

 

In a touristy area, expat area, then it migh make difference.  Though I personally wouldn't pay extra for either.  As stated, it's a buyer's market.

[thaibook]

I would suggest also depends on the rent to price ratio.  There are many newer condos in central BKK where the asking rent or sometimes actual rent being paid is around 2.5% of the asking price.  In such a case a tenant is more of a liability than an asset.

 

If it is more expensive with a tenant, clearly such a condo is of no interest to you.

 

If it is cheaper with a tenant, when will his lease expire, when will your current lease expire, how long will your renovations take, where do you park your money in the meantime and what return does it bring?  Wor it out and make your decision.

 

When I bought my condo, end September, I would not have bought one with a tenant even if cheaper.  I would have had to rent somewhere to live, somewhere for my belongings that had been shipped to Thailand, and would have had to wait before starting renovations.  

 

Good luck with your search.  

[1FinickyOne]

On 11/22/2021 at 12:53 PM, OneMoreFarang said:

And if a seller thinks he can sell (in average) a unit with tenant for a higher price

I doubt most people would feel that way... unless they are trying to appeal to investors... investors are concerned w/things like rate of returns and % for their investment - I would think in most cases, a lower price would be attractive to investors as it would have a higher % return... 

 

I would guess there is a far larger pot of buyers looking for a place to live than a place to buy for investment.. 

[Freddy42OZ]

On 11/22/2021 at 10:22 AM, Peterw42 said:

I think its two separate markets, people are either buying to live in or buying as an investment. As an investor who wants a guaranteed return, an established long term tenant in place is worth paying more for.

As a seller, with a tenant in place, its limiting who the buyers are.

A long term tenant may be unwilling to stay unless the rent stays the same.  

I have lived in my current unit for 10 years, with zero rent increase during that time.  If a new owner appeared and wanted to raise the rent I would move out the following day.

 

[CM Dad]

When the market is filled with empty units for sale, why would you even be interested in looking at one that is already rented and occupied? Unless you derive immense pleasure throwing people out on to the streets you should only be looking at unoccupied units.

[MrJ2U]

More difficult.

 

Buyers don't want to deal with the ordeal of eviction.

 

 

[OneMoreFarang]

5 minutes ago, CM Dad said:

When the market is filled with empty units for sale, why would you even be interested in looking at one that is already rented and occupied? Unless you derive immense pleasure throwing people out on to the streets you should only be looking at unoccupied units.

In an ideal world you are right.

In the moment I look at two identical units in a building. The only difference is that one is two floors higher than the other. One unit is in horrible condition. Nobody will be able to live there until it is completely renovated. It is obviously empty, likely since years. The other unit is in good condition and is occupied.

According to your theory I should buy the unoccupied place and renovate it. Yes, good idea. Except the unit which is in good condition and which is occupied is about 20% cheaper...

 

I will talk to the owner of the empty place about the price but I wouldn't bet that they will adjust it.

 

And just in case I decide to buy the currently occupied unit. I am sure the tenant will find a new place. Like you wrote, there are lots of empty places available.

[Fairynuff]

On 11/22/2021 at 4:15 AM, ezzra said:

The market is pretty much buyer's market where many more apartment for sale than buyers so it doesn't really matter much if you have a tenant or not... I have a good quality, good location apartment for sale in the center of BKK and it has been empty for a long while now and it seems that things will remain sluggish for some time to come...

I think it also depends on location and quality. In my building I know a few apartments that have sold recently. If I was looking to buy for my own use I’d want to know that any tenant was going to leave before I transferred.

[Trvlr55]

I have had up to 15 rental houses at one time, less now, but in USA. From my experience, occupied you would normally get less, than an empty unit. This would vary a lot however. Savy inventor targeting 1st time investors, would probably want to charge more, if they can get it. My concerns, especially in Thailand is how much could you trust the rental history. How well could you do a property inspection on an occupied property. If a property has not been rented in a long time, and owned by smaller investor or company, they are more inclined to at least discuss any offer you throw at them, just to get out; a big corporation, with lots of resources, will tend to stick it out.