If you are looking to buy a property with sitting tenants or tenants in situ, there are advantages and disadvantages.
You might expect to pay less for the property because it has a tenant, but once the tenancy expires, the property will revert to market value and you are still receiving rental income.
Tenanted properties are unlikely to suit you if you are looking to use them as a home. It can take months to evict tenants, so this option works better for landlords looking to invest in a buy-to-let.
Advantages of buying with a sitting tenant, include:
- The rental revenue stream continues
- You will be aware of the reliability of a tenant
- Regulations like gas safety and smoke alarms will be in place
- No immediate need to decorate the property for new tenants.
Inheriting a good tenant means the landlord benefits from tenants being in the property, paying rent, from day one.
Selling a property with a sitting tenant is possible, and doesn’t need to be a real problem, particularly if you have a longstanding, constructive relationship with your tenant. They may not like being disrupted but will probably understand the reasons for selling.
The average time from marketing to completion of a sale is around 129 days, according to data.
That could mean months without rental income if the property is vacant, so selling the property with tenants in place could be more beneficial.
Disadvantages of buying with a sitting tenant
- You cannot move into the property easily if you want it for your home
- Major renovation/building work will have to wait Until the initial tenants have moved out, no building work or renovation can take place
- Delay in the negotiation of a new rental contract.
Latest posts by Gunduz Misiri (see all)
- Tips for negotiating favourable terms in commercial property leases - September 8, 2023
- What do you need to know about rights of way to your property? - June 15, 2023
- Making commercial property more energy efficient and the impact on tenants - March 16, 2023