When buying a buy-to-let residence, investors are occasionally given the option of acquiring the property with a tenant already in place. This simply implies that the present tenant will remain in the property while it is sold and become the tenant of the new investor/owner.
This is becoming increasingly frequent as more individuals rent in the private sector in the UK for longer lengths of time. Moreover, according to study conducted by Countrywide Residential Lettings, more than one out of every ten rental homes purchased by landlords came with a seated renter, a fourfold rise since 2008.
Why Would You Do Such A Thing?
There are a number of advantages to purchasing an investment property with a tenant already in place. The main conclusion is that buying with renters in place may save you cash if the business is well executed. According to a recent research, landlords might lose an average of £2,000 if they complete a property investment without having renters preparing to move in.
The following are some of the advantages of purchasing a property with a tenant already in place:
- It’s one less thing to consider! Buying a ‘buy to let’ home is a time-consuming process, and having a tenant in place takes one less item off your plate.
- It gives you a sense of security about how much rent you’ll have to pay and what kind of return you’ll get! One of the most important factors to consider when purchasing a property investment is the expected return, both in terms of capital gains and rental income yield. When investors buy a property with a tenant already in place, they have a clear image and assurance of the rent they will get. This is especially crucial if you want to finance the home since any lender will want to see that you have enough interest coverage (ensuring that rents are enough to cover interest payments on the loan and other ancillary costs).
- It prevents a period of vacancy between the completion of the purchase and the finding of a renter! Most landlords are aware that long periods of vacancy may significantly deplete a property’s income return. If you have an empty home, you won’t be able to pay your mortgage or other obligations since you won’t be earning any money. The initial void time is eliminated when you buy with a renter in place.
- It saves you money on other costs! Managing a buy-to-let property may be difficult due to the numerous legal and regulatory criteria that must be followed in order to lease a property safely. Before being rented out, the electrics or heating systems may need to be improved, and the house may need to be repaired or redecorated. There will very definitely be costs associated with finding a new renter. Many of these expenditures may be avoided with a renter in place.
- You’re well aware of what you’re putting yourself into! Even with the greatest tenant vetting procedures in place, some renters are troublesome and do not pay their rent or take care of the property. Purchasing a property with a tenant in place allows you to do ‘due diligence’ as part of the acquisition process to determine whether the renter has consistently paid on time. Additionally, when you do an inspection, you will get a first-hand look at how the renter maintains the property.
- You can use the data as part of your due diligence before making a purchase! You may also enlist the help of the renter in your due diligence process because they will likely know the house better than anyone else and can alert you to concerns such as a leaking roof, damp, or a malfunctioning boiler, among other things.
PropTech Simplifies The Process
Purchasing a property with a tenant in place allows you to do ‘due diligence’ as part of the acquisition process to determine whether the renter has consistently paid on time. Additionally, when you do an inspection, you will get a first-hand look at how the renter maintains the property.
You can use the data as part of your due diligence before making a purchase! You may also enlist the help of the renter in your due diligence process because they will likely know the house better than anyone else and can alert you to concerns such as a roof leak, damp, or a malfunctioning boiler, among other things.
DealSourcing is one of the most well-known. By integrating many components into a single system that works as your own real estate agent, this proptech technology can speed up the process of looking for a home in the United Kingdom. Using algorithms and automation, the system can find and categorize investments all across the internet.
You’ll save both time and money! The platform’s ability to find high-yielding assets is its main selling feature. DealSourcing.co is a no-brainer if you want to invest in the UK property market.
The technology can also calculate the return on investment for each property listed on Rightmove, Zoopla, and Gumtree, as well as find underpriced houses for sale, saving investors time and money.
This information was provided by DealSourcing.co.
DealSourcing.co allows you to control the influence of technology. You can search over 200,000+ Below Market Value transactions (Buy-To-Let, HMOs, and BRRR) with ROIs of more over 15% with the click of a mouse. You can rapidly identify high-yield properties using our basic and easy-to-use tools.