Selling house with tenant in place

Luckysasha

I have a 3 bedroom house currently let to the same tenant for the last 2 years. I'm toying with the idea of putting the house on the market. Was wondering if there is a demand from investors looking for property with tenant already in place.

jsd1004

Luckysasha wrote: »

I have a 3 bedroom house currently let to the same tenant for the last 2 years. I'm toying with the idea of putting the house on the market. Was wondering if there is a demand from investors looking for property with tenant already in place.

Nope

ted1

Luckysasha wrote: »

I have a 3 bedroom house currently let to the same tenant for the last 2 years. I'm toying with the idea of putting the house on the market. Was wondering if there is a demand from investors looking for property with tenant already in place.

Absolutely none, and if they need money from a bank, they won't get any unless the house is empty

Pending

There are 2 similar houses near me for sale, one of which has a sitting tenant. The difference in price? 220 vs 260!

Bar one or two places anywhere I've seen advertised with tenants has also mentioned in the ad that it can be sold "with tenants or vacant". So maybe that's an option, advertise it with the tenants there and see what the interest is like. If you get someone to buy with the tenants for the same as vacant all good but if not you can give notice from them to vacate which isn't too long when they have only been there 2 years.

Pending

Pending wrote: »

There are 2 similar houses near me for sale, one of which has a sitting tenant. The difference in price? 220 vs 260!

The problem is that bidders will assume that the tenant is in situ because you cant get them moved out, thereby hinting that the purchaser will have two years of legal hassle and considerable expense before they get any money coming in... The 40k difference might not even cover this.

However, if you were able to demonstrate that the tenant was a good payer, and that the rent was set at the correct level, some cash buyers might be interested as they will have an immediate income and no maintenance or renovations to do.

In any event you should include the option of vacant posession at closing, as otherwise you will limit the market too much.

pc7

I wouldn't touch a property with sitting tenants would think there was an issue. In light of the fact it can take years of unpaid rent to get rid it's not a chance I'd take.

BailMeOut

Pending wrote: »

There are 2 similar houses near me for sale, one of which has a sitting tenant. The difference in price? 220 vs 260!

Is the more expensive one with or without tenants?

Mrs OBumble

Only one way to find out what the situation is in your locality is to put on the market and see. There are places still where it's hard to get tenants, and there are cash buyers who aren't constrained by banks.

You would need to address the question about why up-front, ie be prepared to show that there aren't issues with the tenancy.

MicktheMan

Aren't commercial properties sold quite often with sitting tenants. So why are domestic properties treated differently?

Glass fused light

MicktheMan wrote: »

Aren't commercial properties sold quite often with sitting tenants. So why are domestic properties treated differently?

The commercial tenant has less protection in law.
Commercial leases if properly written are easier to enforce where the tenant is not paying rent, because it's assumed that two businesses are on equal footing when entering into a contract. Even with redress for an illegal eviction the commercial tenant would have to go to court for breach of contract having been first to breach ie the tenant can't argue loss of profit when not paying a basic cost of the business.  

It's not as if the commercial tenant has no where to sleep that night so a 'domestic' tenant can argue being evicted caused all kind of distress, as well as having to pay for a hotel room, the landlord has a higher potential cost and a higher burden of proving they acted within the law.

Claw Hammer

MicktheMan wrote: »

Aren't commercial properties sold quite often with sitting tenants. So why are domestic properties treated differently?

It depends on the covenant. In most commercial leases the buyer is a buy to let investor and will generally be quite experienced. If there is a lending bank they will examine the status of the tenant before the sale and will only lend money if the borrower has significant equity. Also, in a commercial property lease there is usually a forfeiture clause enabling the landlord to just walk in and change the locks if the rent is not paid.

zef

If the tenants are still in situ during the sale it raises huge red flags- as they could be 'overholders' and never pay you a penny.
It seems to take approx 50k off the price of house in my area, from what I've seen on Daft, e.g. houses up for 175k with tenants in situ that would be worth 225k+ etc.