Dear David, 

I bought a preconstruction condo as an investment property just after the pandemic. When it closed about a year ago, it didn’t appraise at the price I paid, so I had to make a significant additional down payment. My tenant is at the end of their lease and moving out, and it looks like I won’t be able to get the same rent again. With all the ups and downs in the market, I’m thinking it might be time to sell. Should I try to find another tenant, or sell it vacant? – HAD ENOUGH

DEAR ENOUGH: This is a question many condo investors are asking right now. When you buy a preconstruction unit, there is a lag of several years between when you sign the agreement, and when you take possession. You locked in when the real estate market was hot and rates were low. By the time the building was complete, home values had shifted and interest rates had climbed, which is why you had to put more money down at closing.

Now that you’re selling, it may seem like a good idea to have a tenant in place, so the income can help offset your carrying costs. Selling a tenanted property is challenging at the best of times: showings are harder to coordinate, the unit will not present at its best, and buyers often see less value if they are unable to occupy the space when they want to. A buyer who plans to live in the unit will often pay more for vacant possession so they can move in when they choose.

If you list your condo for sale when it is vacant, you may miss out on a few months’ rent, but that loss will likely be smaller than the hit you’ll take to the sale price with a tenant still in place. A clean, vacant condo is easy to stage and market properly, and an open showing schedule allows you to accommodate as many interested buyers as possible. Condo values are currently under pressure in the current competitive marketplace. Buyers will be comparing your unit to others in the same building and neighbourhood, and you want yours to shine.

Timing is something else to consider. If you don’t need to sell your condo right away, you may want to hang on to it for another year or two, so you can ride out the current market dip. Markets move in cycles, and while condo values are softer at the moment, history shows that they’ll recover and grow in the long run. Renting your unit out again now, even at a slightly lower rate, can help you cover some costs while you wait for a more favourable time to sell in a few years.

Ultimately, the right strategy comes down to your financial position, the time you have available, and your personal goals. If selling the condo now is your priority, leave it vacant and put your best foot forward. If you have some flexibility, you may decide to sit on it for now, and revisit a sale when market conditions improve.

PRO TIP: It may be a weight off your shoulders to sell the condo now, but financially you’ll be better off if you wait a few years. Talk to a Realtor who understands the resale and rental markets. They’ll help you compare the short-term cost of vacancy against the long term benefits of timing your sale, to help you get optimal results. #Advice #AskDavid #TheNegotiator

David is a top-selling Broker in Kitchener-Waterloo Region. He works personally with you when selling or buying your home. Moving? Get it right. Ask David today! Call or text 519-577-1212.