Buying property with Tenants in Situ

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    Buying property with Tenants in Situ

    I am currently looking at buying a property with Tenants-In-Situ, I do not have any real information as yet regards the existing tenancy (we are only in the process of viewing the property/ beginning conversations). I am confident that the tenancy should be on an AST basis, as I can see previous rental listings for the property in the last 3-4 years, and I do know that the current LL manages the properties themselves, without the use of an agent.

    I wanted to ask if anyone has experience of buying a property with Tenants-In-Situ, and how you have gone about this in terms of ensuring the tenants are 'good' tenants, without just relying on what the current owner tells me.

    The existing owner is selling his wider portfolio, so I am confident it is not a case of him just trying to offload a house with problem tenants.

    My initial thoughts around how to approach this are as follows:
    • Viewing the property - see how the property is maintained.
    • Ask the current LL for his redacted bank statements for the last 6 months, just showing the regular rent being received on a timely fashion by the tenant in question as the un-redacted information.
    • If I can find the tenants name(s) before purchasing the property, I can do a Google search.

    Given this would be my first time buying a property with a tenant in situ, I don't know how possible it will be to actually pursue the above approach.

    If anyone has any experience that would help... it would be much appreciated.
    I'd also ask if there is any other checks I could do as part of the process that I may not have thought of.



    Thanks.
    Cdub.

    #2
    I doubt the LL would provide his bank statement to you, if it is part of a larger portfolio it's likely that the payments would be coming from various properties so may be hard to isolate the payment.

    Under the current situation it is hard to say when a good tenant becomes a bad one, as they could easily lose their job due to the pandemic. You really have no guarantees these days. You should view the property, and assess the amount of work needed, the rating of the property, if all the compliance aspects have been done. The only thing you may be able to ask for is the tenancy agreement and if the deposit is held.

    Comment


      #3
      You can certainly ask for absolutely any information you feel relevant. If the vendor refuses to supply it then walk away
      ​But past performance is no guarantee of future results.
      I wouldn't buy without viewing internally and personally meeting the tenants (and knowing their names of course !)

      Comment


        #4
        I would suggest buying a house with existing tenants is fine if you are an experienced landlord and know what to look for and have a gut feeling but not if you are a new landlord.

        You mention

        "The existing owner is selling his wider portfolio, so I am confident it is not a case of him just trying to offload a house with problem tenants."

        Do you know that as a fact ? even if they are all being marketed the landlord may only want to get rid of a few at a certain price and only dispose of certain select properties at a higher price. They may have only chosen to market some of them based on tenant occupation (job) or previous challenges on marketing - how do you know what the landlord owns except what you are being told.

        I would not expect them to be too helpful to you (especially if there are problems), I'm not sure data protection even allows the landlord to share the tenant reference (In fact I'm pretty sure it won't but others will advise)

        If I were you I would view as that's the first most important step if the tenants are not in when you view then approach them separately, they are equally probably wondering what a new landlord would be like, then you can ask them if they are looking to stay long term, and get a feel about them by the general state of the house etc

        From the viewing you will see the consumer unit and if it has a tested cert attached etc etc and the state of any appliances etc

        The best you can probably ask the landlord for is a statement saying how many months they have rented for and how many payments have been paid on time and if the sources of the funds is through employment or UC etc, there is no way I would send out a statement redacted or not to someone who was just interested in viewing a house I had for sale.

        All the best

        Comment


          #5
          I have bought properties with tenants in place, which worked out well.
          I would no longer consider such a purchase.

          As you step into the shoes of the selling landlord, there is too much that the landlord might not have done or have done wrong which could negatively impact your ability to evict the tenant.
          That increases the risk of the purchase to a point where I simply wouldn't consider it now or in future.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            A let property would normally sell at a discount to a vacant one. Over the years, most of the purchases I have made had been let properties, either as part of a portfolio or part of a building. Negotiate well, hold your nose and rely on the fact that over time prices do tend to go up - even if, unfortunately, not always in the areas in which one has bought! I would be interested to know the discount to Vacant Possession value you can achieve, it should be at least ten sometimes fifteen percent. Back in the days of widespread rent control, when rents were controlled at pitifully low levels, there was a time when let properties sold at a discount of around sixty percent of vacant possession value - but they may have been partly because rent controlled dwellings were typically unmodernised

            Comment


              #7
              Originally posted by cdub85 View Post
              Given this would be my first time buying a property with a tenant in situ, I don't know how possible it will be to actually pursue the above approach.


              Thanks.
              Cdub.
              Find out exactly how long the tenants been living there for, the date they 1st moved in ?

              Don't just assume that "previous rental listings" is correct and ask yourself why is LL selling with tenants in situ !
              Thunderbirds are go

              Comment


                #8
                .....Half?....

                Comment


                  #9
                  As a regular auction goer it's quite common to see vacant properties sell and reappear tenanted at next auction to sell at a premium.
                  many buyers seem dazzled by the apparent instant returns.

                  Comment

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