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?

She didn't ask a question that was insulting to people who rent at all. She rents herself FFS!

She was in the very early stages of thinking about a possible future situation and merely floated the idea to see what other people might think, and there's nothing wrong with that.

If people are insulted then it's got way more to do with how they feel about themselves than anything the OP said. There's really no need for the MN landlord hate to spread to people who aren't even landlords.

YABU, the tenants get the good news the place has been sold to a landlord. Oops the landlord doesn't want to be a landlord here's your 2 months notice anyway.
Either be a landlord or buy somewhere to live.

Oh dear, AIBU must be going soft!

A saying comes to mind: a fool and his money are soon parted.

I don't hate LLs. I used to be one. One that actually respected the importance of the job! And it is a job!

I mean FFS has the OP never heard a horror story about tenants trashing places/legal battles? I seriously suggest she reads the forum on MoneySavingExpert about renting/letting. Or the fiance, if he isn't now signing up to FL.

LeftMyRidingCrop,

"Evil LL" brigade here, SAH!

We're on our tea-break at the moment, while we wait for a genuine emergency.

Thank goodness! You were all alive and well when I was a LL!

I think this thread shows our reputation as an ants nest of RAGE has spread far and wide. I'm waiting for a longer stick thread to make me bite.

Not that you LL-haters were ever nasty to me - I was an exceptionally nice LL, if I do say so myself! Actually - my tenants were known to me already so it was easy and they had me for dinner sometimes :-)

Life is still simpler without it though!

I wouldn't necessarily 'greedy' but can see some posters were responding to the fact that the OP is in the very fortunate position to buy a property outright but liked the idea of the 'extra cash' tenants would bring in.

I'm not one of those 'LLs are evil' people but that comment was bound to raise a few eyebrows.

And yes, all tenants are usually on short leases. My lease is six months but has been renewed twice a year for 10 years. Of course I know it's not my property but it's my home and I have looked after it well for a decade.

My LLs could sell if they wanted and I would be devastated but would have to deal with it.

To be honest, if a new buyer with no mortgage was planning to let me stay for a while because they'd 'love the extra cash', I'd do all I could to move out before they bought.

And the idea that 'if I didn't want to rent, I'd buy' from a previous poster made me think they live in a different world. I am an independent woman in her 30s who earns a salary that can afford £700 a month rent for a second floor flat (not in London). Plus all the bills.

I have no savings and never will when well over £1000 per month (more than 2/3 my salary) is spent on rent and council tax and utility bills. Unless rents come down or I inherit money, I will never be able to afford the deposit on a shed in my expensive city.

And I consider myself fortunate to live in a property I love and be able to afford it when many, many more people aren't in my position. I still can't envisage a time I'll be able to buy. Most people can't in this country.

If a prospective landlord asked me those questions about who would be responsible for general management of the property, I'd check for Noel Edmonds with a camera in the bushes, and then move.

[competitive]

I have reported myself. Clearly posted in the wrong place, apologies op, didn't mean to post-jack! Lack of sleep ....

I stand by my comment that what the op was proposing was selfish.

Letting isn't just another 'good little earner' like flogging stuff in eBay. You are in a powerful position controlling people's homes. Evicting someone who hasn't broken any of their tenancy terms just to make a quick buck is selfish. Homelessness isn't fun!

It's quite shocking that there aren't legal protections in place to stop amateurs like the op doing what she intended. The landlord registration scheme is toothless btw.

And I say all this as a landlord who's been doing it for over a decade.

Lighbulbon - who said ANYTHING about eviction or making people homeless?

I asked a question about legalities and responsibilities and when I found these out I decided that it wasn't for us. That's all.

who said ANYTHING about eviction or making people homeless?

You said you were moving in with your DP next year. It was implied in your first post that you would live in the property then but were thinking about buying a tenanted property now.

You and a few others on this thread were seemingly anaware that most private rental contracts in the UK were short term and had to be regularly renewed. The tenants may have been living there for years and wouldn't necessarily want to move out. As one would assume that you were not propsing to have the tenants continue to live in the property with you, the only alternative is that they move out, possibly against their wishes.

It's quite shocking that there aren't legal protections in place to stop amateurs like the op doing what she intended. The landlord registration scheme is toothless btw.

it's not just the OP or amateur landlords. This is a problem across the board for private tenancies. Private tenancies are simply insecure; there is no tenure and leases are usually short. So every lease renewal is potentially the last. That's the problem, and the OP has very little to do with that.

Decent interest accounts:

Santander 123: 1% on balances up to £1,000 then 2% on balances up to £3,000 and then 3% on balances up to £20,000. They also do cashback on most utility bills at varying percentages. With an account each plus a joint account the OP can have £60k in there. Requires at least two direct debits per account plus I think £1,000 paid in per month. £2 a month fee rising to £5 a month next year some time.

TSB: 5% on balances up to £2k which is £6k for a couple. They have an associated monthly saver account which lets you feed in up to £250 a month. No fee or direct debit requirements but need to pay in £500 a month.

Nationwide: £100 cashback for switching and 5% on balances up to £2,500. Must use switching service though but can probably just move your direct debits etc back afterwards (check small print though).

Tesco bank: 3% on balances up to £3,000 plus you can set up direct debits (rather than needing a company to do it) which can be used to satisfy the direct debit requirements of other banks.

Lloyds bank: 4% on balances up to £5,000 as long as you have a minimum of £4,000. £5 a month fee which is waived if you pay in £1,500 a month. Two direct debits a month requirement.

That's roughly £100k with rates of between 3% and 5% not including the TSB monthly saver (so more than £3k in interest over a year) - just needs a couple of hours to set the accounts up and set up direct debits and standing orders to satisfy the paying in and direct debit requirements.

sorry but I think that buying a house with tenants in so that when you kick them out your life will be easier, kind of stinks a bit.
Mind you if you don't do it then someone else will.

I have a few friends who are private landlords, do not buy a property expecting it will be in any fit state for you to then move into after a tenant has moved out,
You either mentioned or I gathered the property would then be done up- do you have any idea how much these costs can run into? Unless you have trades who are willing to do you a favour I would say this is probably not feasible. However I am calculating on the prices that we have in this area...house prices and self employed wages for trades vary quite substantially in certain areas, but you must do your homework on what a refurb would cost after tenants move out (even if you look at the prices of new kitchens, new bathrooms, carpets or flooring, as an estimation you'll spend That again on labour for installations)

Whilst you are waiting for the tenants to move out, you will still be paying rent to different landlords separately? You are going to save what you both spend on rent when you buy a house together, which is more than likely more than the rental oboe you'd receive from a £140000 investment, with none of the risks of letting.
If you want to be private landlords, please don't do it in a property you want to live in. Some tenants are terrible. My one friend who has several houses that she lets out, has had some pretty disgusting things happen to her properties, she's had to have people in to clear out drugs parephinalia, she's had people damage everything that they could when leaving, generally she finds that if a tenant is asked to leave, she A- doesn't see another penny of rent from them
B- it's such a state.

Also, tenants tend to like their tenancies to roll on, I signed a tenancy five years ago, it was about 4 years out of date the last time I signed it.

That's roughly £100k with rates of between 3% and 5% not including the TSB monthly saver (so more than £3k in interest over a year) - just needs a couple of hours to set the accounts up and set up direct debits and standing orders to satisfy the paying in and direct debit requirements.

Notice the cutoffs: You would need about 15 accounts for that (since for some the ceiling on high interest is low), and some specifically require that you have wages sent there (not just 1500 a month from any source).

Red I have about £45k in about 6 of those accounts. Only the Santander account has wages going into it, because that's what we use as our main current account, but it's not compulsory for any of them.

For most banks, a couple can have a joint account and a sole account each, so it's quite easy to pass £100k but yes you would need 10-15 accounts - there are plenty of people on moneysavingexpert who do this. It's the best way to get decent interest these days.

Only a couple of the accounts require DDs and it was easy to change some online. I have £1500 that cycles round by Standing Order, so it goes round all the accounts over a period of about a week or so to satisfy the funding requirements.

All the above can be set up easily and then it just looks after itself - no hassle at all.

Certainly much easier than looking after a tenanted property. After all, my money is not going to call me on a Sunday morning to complain that it has no heating is it?

"You are in a powerful position controlling people's homes. Evicting someone who hasn't broken any of their tenancy terms just to make a quick buck is selfish. Homelessness isn't fun!"

Speaking as someone whose home (but not house) was recently sold, this is not what the OP was intending to do. It's not as if she can shark around looking for properties with tenants in and buy it against the current owner's wishes, then boot out the tenants. She would have been looking for a house with sitting tenants and then would have given them due notice. It's a PITA if you're the tenant but shit happens and I held my old landlady responsible, not the buyers.

What annoyed me the most was that whilst the letting agents had checked me out and made sure I'd be a good tenant, they hadn't checked her out. She needed to sell up less than a year after I'd moved in. This was not a surprise to her but it was to me - and she knew I was looking for longer-term accommodation. The checking process needs to be two-way. As a tenant you do need to know if your LL will be reliable and that they can afford their property.

Certainly much easier than looking after a tenanted property. After all, my money is not going to call me on a Sunday morning to complain that it has no heating is it?

the return is potentially a lot less too, although at 4% it's not bad. unfortunately, of course, in both cases the return is less due to tax.

I have no idea why you would chose to live in a student area (unless nothing else is affordable obviously). If you have a choice, don't do it.

It's a lot less risky than having a tenanted house though - there's so much that can potentially go wrong and end up costing thousands.