Would we be unreasonable to buy a property that already has tenants?

[notamum3210]

Posting here for traffic and perspectives, advice etc. Fiance and are are both really quite clueless

We are in the fortunate position of being cash buyers budget around £140,000. We'd like to move in together next summer and are both in rentals at the moment until then. Fiance has thought that it might be a good idea to look at purchase somewhere now(ish) that currently has tenants.

This, he argues, would guarantee some income which we could put towards refurbishment, furniture etc. Then, when tenants move out, we could move in. I love the sound of the extra cash but I'm sceptical over whether its really that straightforward.
I'm not sure whether this would make us liable for landlord insurance, letting agent fees or general management of the property.
Does anybody have any experience?

Oh yeah, I forgot about the deposit and getting it protected.

Emotionally, how would you feel about seeing someone in "your" house and making a mess of it?!

And who would organise inspections?

So much to think of, not something to enter lightly at all!

You might be better off getting a small mortgage and using some of your capital for home improvements. Have you spoken to a financial adviser?

Chatting: yes, but WHEN will they leave? And will it require a court battle?
And will they wreck it in the meantime? And will they keep paying rent?

For the sake of six months' rent less COSTS it's hardly worth it!

Kicking people out at your convenience is so selfish.

Hang on, isn't this a fairly well known risk of renting? If you want a house you can't get kicked out of they surely you should buy??

I'd say the biggest issue is that you will end up with a property that is in a student area. Do you really want to live there?

A buy-to-let mortgage is likely to cost more than an ordinary one in terms of interest. You will have to rearrange when you take over the property yourselves, which can also be a significant cost.

Hang on, isn't this a fairly well known risk of renting? If you want a house you can't get kicked out of they surely you should buy??

It's a bit less simple than saying, "I don't like my tenancy being ended. Right, I'll buy instead".

Doh! Of course! All those silly renters should just BUY somewhere! Why didn't they think of that?!!

Shove the holly: RTFT! It's a cash purchase!

It needn't be that complicated or problematic. If you can afford a letting agent then they'll take care of inspections, renewing/terminating tenancies, gas/electric certs etc. All you need do is get landlords insurance which is easy peasy online.

I think it sounds a good idea to utilise your cash. Good luck!

Shove - OP is a cash buyer, so luckily this isn't an issue.

To me (LL of one house), the upside to this idea is that tenanted properties (esp. student tenancies) will sell for less than the equivalent non-tenanted house. The photos online will be of dorm-style rooms with posters all over the shop, dirty communal areas and general grubbiness. Viewings won't be preceded by a tidy. In short, as a buyer, you need to have "vision" to see the place as it could be / do a bit of work. Not everyone wants to, so you can get a bit of a bargain.

The downside: you'll be responsible for the house and possibly its contents from the time you exchange (and certainly boilers etc). You can't really know when something will go wrong and need repair. One medium-sized incident (boiler, roof...) could wipe all your profits out - and you'll still need to redecorate/spend money when they move out.

There is a risk of additional costs/delays if tenants refuse to move out and you need to follow an eviction process.

Also, check the tenancy agreement / have a lawyer check the tenancy agreement before proceeding - how much notice do they have to give? Can they extend at their discretion? Etc.

Another thought (not with the aim of turning this into a LL-bashing thread): if you are keen to get into BTL, could you take out a mortgage for the resi house, and leave aside some of your cash as a BTL deposit once you're settled?

If a landlord is selling a property with tenants in situ it is likely to be a very long term let, it may be periodically renewed but it would be a tenant who would expect to stay long term or the landlord would sell as a vacant possession. With regards to students it would be rare for a student landlord to sell a property mid year, it also classes as a HMO so you would need to be registered. If you did find a random student house for sale with students in situ then you'd be very lucky round me they tend to be sold as blocks of property so for example 10 or 12 houses sold as one block because they don't expect them to go to a single house purchaser but another investor.

One word of advice though if you do go ahead just because someone has a fixed term tenancy it doesn't mean that they will move out on that date you may have to go through a long and costly process to evict them. it could cost you more than you will make in rent.

Ooops, sorry OP, I missed that you're a cash buyer!

Another alternative would be to take out a small mortgage to get that money for furniture etc. So you could pay down £100k and take out £40k mortgage to do work on the house. I understand that the debt can feel scary, but interests rates are very low and a small amount that can make your lives a whole lot easier and is payable over a long period of time isn't really that much of a risk for most people.

Thank you for the advice. I'm afraid taking out a mortgage (however small) isn't much of an option either...(complicated reasons)

It looks like a tenanted property isn't really for us for reasons outlined here - we simply don't have the time and experience to commit to the responsibilities. I do resent the poster who called me/us greedy....it was just a question and some of the response have been unnecessarily hostile.
Thanks anyway

OP - don't - just don't. to go to all this effort for a 6 month let and then end up living in a student area at the end of it, really, just don't do it.

there are all sorts of things you have to do as a landlord - insurance, gas testing etc. fine to do all the work, the paperwork etc if you are seeing this as long term but for only six months, forget it.

being a landlord looks tremendously attractive and easy money until you are one. my flat was let and there was a fire in the property below and mine was a nightmare to sort out. I then couldn't get the tenant to move on even though she knew right from the start it was a very temporary let and I had reduced the monthly rent to reflect this fact and to be fair.

You are risking your life savings on something you don't know about. unless you get yourselves up to speed pdq, then just don't don't don't.

I would also seriously consider whether you want to live in an area surrounded by students. have a look at some of the other posts on AIBU about the huge problems posters on here have with loud music from students, rubbish, parties etc. things are cheap for a reason and a cheap house is cheap either because of the area or the property.

Ignore the hostility, it is a kneejerk reaction to any LL question for a proportion of MNers.

But you are right, it does seem that a tenanted property would need you both to do more research to see if the prospect of being a LL, or affording a management company to do that for you, is right for your circumstances.

Go and talk to a lettings agent, or 3, and get their best advice, fees etc. You will soon get a feel for whether it is right for you.

Good luck.

" If you want a house you can't get kicked out of they surely you should buy??"

D'oh! I knew there was something I forgot to do yesterday. I'll just pull 50k moving expenses and deposit out from behind the sofa* and arrange a mortgage on a short-term temporary contract that doesn't pay very much. Sorted!

• Not really. I haven't got a sofa.

OP I rent. My house was recently bought by someone who fortunately wants a long-term tenant. Had it gone to someone wanting to move in I would have had to go. I wouldn't have been happy but was more peeved at my previous landlady for misleading me as to her situation than I was at potential buyers who came around. However, if any potential buyers came along and said "oh it's fine, you can stay her for another 6 months, then we'll want it back" I would have been looking after my concerns and mine only. I would have moved out to somewhere with better long-term prospects ASAP and given the new owner the minimum possible notice and done the minimum possible to get my deposit back. I think you're making the right decision in not going ahead.

I think you need to work out your absolute maximum benefit in £s if rental... Then minus tax, landlord insurance for HMO, minor running repairs and any other management fees... Say the rental is 1000pcm x 6 =£6000...
So what would you be left with? You may clear a couple of grand

The downside of this is: the tenants

They may not look after it, a friend's property was absolutely trashed when she gave legal notice.
You could give them notice - it is very easy to stuff up s21 forms.. Making it void.
Even if properly served... You may still have to go to court for possession.
Or, they must simply decide not to pay rent. A different pal's tenants paid the first 3.months and then nothing 'as they couldn't afford it', it took her 9 months to get them out... She lost 6k plus the 12k or took her to get it back to rentable condition!

OP: I gave you plenty of decent advice as well as pointing out that your ill-conceived idea IS a bit greedy. If your fiance would like to google again "quick ways to make a bit of cash" maybe he could look up Forever Living.

I have been a LL myself, as I already explained, so it's not a "knee-jerk" reaction.

You and your fiance have got a bit of cash but not enough to enter into a business like this with all its risks. Especially when this is people's LIVES and HOMES you are playing about with.

You clearly don't understand AIBU either! If you want lovey-dovey I suggest you go to Netmums. They will probably tell you "go for it, hun".

Thank goodness that, in Scotland, at least, you have to be registered as a fit and proper person to be a LL!

What the hell is that supposed to mean, RidingCrop?

Who have you aimed your judgey knickered nastiness at?

OP has asked a question, explained she knows little and then that the info given has made her rethink the whole thing.

Now you want to castigate her so personally and nastily because of what?

Which bit, Blanche?

She asked a stupid question. In AIBU. One which is frankly insulting to people who rent. (I'm not even one of them).

She got arsey when told.

HTH.

Especially when this is people's LIVES and HOMES you are playing about with.

and

Thank goodness that, in Scotland, at least, you have to be registered as a fit and proper person to be a LL!

She didn't get arsey she just pointed out that some posters were a tad unecessary, and they were -- if that includes you, then own it.

Anyone is entitled to ask a daft question, that is, surely, what forums are for. EVERY question will be daft to someone. Just as your Which bit, Blanche? seemed to me!

Those angrily accusing you of booting a family out of their home have clearly never heard of fixed-term tenancy agreements, or that giving 9 months' notice is actually really rather good.

That said, you're clearly way over your head and this all seems a bit too difficult for you at the moment.

The OP didn't get "arsey". She took on board comments and came to the conclusion it was more than she can cope with.