Why Selling Your Rental Property with a Tenant in Place Might Be Costing You Money

In Central Austin, we work with all kinds of investor-sellers. Some inherited their property from a family member, others have owned for just a few years. Each has their own goals and pressures when it comes time to sell.

Here's something that surprises people: the investors who've owned their properties the longest are often the most price sensitive. You'd think they could afford to lose a few months of rental income while prepping the property for sale, right? But many of these long-term owners depend on that monthly cash flow for their income. Bridging the gap for even a few months until they can access their sale proceeds can be a real struggle.

The Assumption Every Investor Makes

We've never—not once—had an investor-seller walk through our door thinking it would be smart to sell without a tenant in place. Never.

Why is that such a universal thought? Because we're all human, and we naturally assume everyone else is in our situation.

Sellers of rental properties typically think: "Well, if I sell with my great tenant in place, then a buyer just like me will want this great tenant in place too."

Here's the problem with that logic.

The Math Doesn't Add Up

In a typical year in Austin, only 20% of properties are purchased by investors. Yes, 2021 was different—some data shows investor purchases were much higher that year, but that was situational due to really low interest rates and investors chasing returns higher than the 1% available in the bond market. In a normal year, we're at about 20% investor buyers.

So if you put your rental property on the market with a tenant in place, you're marketing to only 20% of the potential buyers.

What About Builders?

You might be thinking, “But a builder might want to buy it. I could be helping them by having a tenant in place while they get their permits. I've heard Austin permits take forever."

Builders only make up 5-10% of the market, depending on the neighborhood and how strong the market is. And in the fall of 2025, they're hardly buying at all, making up only about  2% of the market. Compare that to 2021-2022 when they made up 5-7% of buyers because they knew they could sell their finished product easily.

In both scenarios—whether you're hoping for an investor or a builder—you're marketing to tiny market segments instead of appealing to as many people as possible.

Who's Really Buying Your Property?

Now, if you're selling a multifamily 4-plex in Tarrytown, sure—the buyer has a 90% chance of being an investor. Leaving tenants in place is the obvious right choice. And yes, there's the very rare buyer who'll purchase a multifamily to live in while renting out the other units. (Though unlike cities like Chicago where two-flats are common, most Austinites aren't interested in buying a duplex and living in one side. Weird, right? I think so too, but that's a conversation for another day...)

Here's what matters for most of you: when an investor sells a single-family property, 80% of those transactions involve homeowners who plan to use it as their primary residence.

This type of buyer is 90% likely to be getting a mortgage. And here's the kicker—if they get a mortgage, they have a legal requirement to occupy the property within 60 days of closing or they'll be committing mortgage fraud. No one wants that.

This means leaving a tenant in place makes your property essentially impossible for a regular homeowner to purchase with a standard primary residence mortgage—unless your lease happens to expire within 30-60 days after closing. And even then, you're assuming a homeowner (perhaps even a young first-time buyer) is willing to deal with a tenant at all, even if only for a few months.

The $6,000 Problem That Costs You $30,000

Here's where sellers get stuck. They get blinded by the short-term loss in cash flow instead of putting it in terms of the price of the asset.

"Oh my gosh, I'm going to lose $6,000 in rent with it being vacant for 2 months!"

Let's do the math on that $600,000 property. That $6,000 you're worried about? It's one percent of your asset's value.

Now let's talk about what limiting yourself to 20% of the buyer pool actually costs you. When you have fewer buyers competing for your property, you have less leverage. Fewer offers mean less opportunity for a bidding war. In our experience, the difference between a property that appeals to everyone versus one that appeals to only investors can easily be 5% or more of the sale price.

On that same $600,000 property, 5% is $30,000.

So you're protecting $6,000 in rent while potentially leaving $30,000 on the table. That's not a smart business decision—that's fear of the wrong number.

It's All About the Numbers

We are all about the numbers on our team. We do everything we can to improve the odds that our sellers have a great outcome. We get picky about the type of light bulbs you use. We polish up your landscape. We can even be seen precariously standing on porch furniture to dust that pretty hanging light so it doesn't draw the ire of a picky buyer. All of this is done with one goal: moving the percentages more in our sellers' favor.

If we're going to do all of that detail work, we certainly want to improve your odds by making you appealing to the 80% of the market that wants to live in your property as a primary homeowner—not just the 20% who want to be investors.

Making your home appealing to as many people as possible will always improve your outcomes.

What About Prep?

You'll hear us talk about prep all the time. Our prep process is mythical—we know intuitively our sellers get better outcomes with it. But we also have case studies that suggest our sellers have yielded as much as 8% more in their sale due to the make-ready process we use to get properties ready for market. (Read more here.)

How many tenants are going to be super jazzed up with us rearranging their personal belongings to get you great photos? You probably guessed it…none!

We always say, sellers are happiest when they sell a vacant home! This is especially true of a home without tenants in place!

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We are delighted to be your guides to Austin and Austin real estate!

Cheers,

Jen & the team

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