Buying BMV Tenanted Properties – What You Need To Know?
Looking at the pros and cons of buying a property with tenants in situ and how you can start your investing journey today…
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On this page, we will be exploring all of the aspects involved with buying a below-market-value tenanted property, from the pros and cons to the documentation you will need before completion and what you will need to be aware of when buying tenanted homes.
Are you looking to get into the buy to let market and find potential property purchases with great rental yields? That’s something we can help with.
WHAT DOES TENANTED PROPERTY MEAN?
If a property is tenanted, it means that there is a tenant living at the property and they will stay living there when ownership of the property is switched from the current landlord to the new landlord. Also referred to as buying a property with tenants in situ, a tenanted property is a house that comes with tenants already in place.
There are many reasons why the previous landlord may be selling a property with tenants in situ. It could be because they don’t wish to evict the tenant, or they have a good relationship with them. It may also be that the sale is taking place during the tenancy term and they cannot be evicted.
Can you buy a tenanted property to live in?
Whilst it is certainly possible to purchase a tenanted property, it is not usually possible for you to then live in it. This is because if you purchase a property with a tenant in situ, then the tenant is the one who is legally staying there, and you will find it very expensive, time-consuming, and difficult to evict them from the property if it is not the end of the tenancy agreement.
Even if the property you bought was without tenants, the majority of buy-to-let mortgages come with a clause in them that states you will need to lend to tenants.
Can you get a Buy To Let mortgage to purchase a property with a tenant?
Yes, you can! You will have to through a specialist lender in order to purchase a property with tenants in situ, however, there are plenty of great options to choose from. Whilst the fees may be slightly higher, they are often higher regardless of whether you have tenants in situ or you have a vacant buy to let property.
Start your property journey today
Start your property journey today
WHAT DOCUMENTS DO I NEED WHEN BUYING A PROPERTY WITH TENANTS IN SITU?
When buying tenanted housing there are certain documents that you will need to ask for copies of to ensure you are making an informed investment. Below are some of the most important documents you will need:
- The most recent copy of the property’s electrical safety certificate
- An Energy Performance Certificate (EPC)
- The full tenancy agreement
- The most recent gas safety certificate
- The house in multiple occupation license
- Insurance documentation relating to the property
- Inventory form
- Guarantors agreement
- Appliance guarantees
- Builders’ warranties or guarantees
- Management company’s contact details
- Tenants contact details
The pros and cons of selling with a tenant in situ
Pros
One of the biggest advantages of purchasing a property with tenants in situ is that you get income from day one. If you have tenants already living in the property, then you start earning as soon as you take ownership.
As the property already has a tenant living in it, it is unlikely that you will need to refurbish it. Properties usually require a refresh between tenants, so if you already have a tenant in place then it should be in good condition.
The majority of problems with a regular buy-to-let property is looking for a tenant. When you take on a property with tenants already in situ this is not an issue.
Properties with tenants in situ are often cheaper than their buy to let counterparts. This is because they are harder to sell due to the tenant already living there.
Cons
Unfortunately one of the risks of selling with a tenant in situ is that the tenant may not be a good fit for the property.
You may need a higher deposit when you purchase as some lenders view properties with tenants in situ as higher risk.
It can work out to be difficult and expensive to evict a tenant in situ, so it is wise to check the status of the tenancy agreement before you commit to buying their property.
WHAT YOU NEED TO KNOW BEFORE BUYING A PROPERTY WITH TENANTS
What type of tenancy agreement is in place?
One of the most important questions to ask when purchasing a property with tenants is finding out what type of tenancy agreement is in place. As far as the legal position is concerned, regardless of whether the tenant has a written agreement or not, the default position is the Assured Shorthold Tenancy (AST).
Regulated tenancies and tenancies formed prior to the introduction of the AST can pose additional risks to investors.
You should ask the vendor what type of tenancy the tenant has, as well as asking to see a copy of it.
Was an inventory performed when the tenant moved in?
An inventory will let you know exactly what is included in your property as well as the condition that things are in. This way, when the tenancy ends, you will be aware of what you will need to make deductions from with the tenants’ deposit.
Has the tenancy been set up correctly and is the deposit protected?
It is important to be aware of whether or not the tenancy was set up correctly. This includes ensuring the tenant was given the right knowledge and went through ‘right to rent’ checks. You should also ensure that you have the details of the tenancy deposit scheme used to protect their deposit.
Start your property journey today
Start your property journey today
IS THE TENANT PROMPT WITH RENTAL PAYMENTS?
It is important to know how timely your potential tenant is with their payments. Before you commit to purchasing a property with a sitting tenant, it is crucial that you are aware of their payment history and how timely they have been. You can find this out by asking the vendor for a redacted bank statement showing the payment going into their account, what time it was sent, and how much was sent. You could also ask the previous landlord’s solicitor to provide a schedule of payments showing the same.
Should there be any rental income arrears, you should take it into consideration when purchasing.
How long has the tenant lived at the property, and how long do they plan to stay?
This information should be fairly easy to come by. You can ask your vendor’s solicitors for these details in order to find out how long your tenant has lived in the property and how long they intend to live in the property. If you plan to keep ahold of the property for the long term, it will allow you to plan for the future if you know how long your tenant plans to stay.
What day is the rent due?
In order to start your investment as a new landlord off on the right foot, it is important to know what day to expect your rental payment. It needs to be before your mortgage payment goes out so that you are not always covering your mortgage payment with your own money.
When you set up your mortgage, you can usually choose the date that your payment comes out. So if rent is paid on the first of the month, it is wise to set up your mortgage payment to come out on the 10th.
Are there any maintenance issues to be aware of?
As a landlord, any issues with the property legally must be taken care of by you. This means that if there are any maintenance issues with the property, you should be aware of them.
What is included in the sale?
When you purchase a property with a tenant, it is important to know exactly what is included with the property. This will allow you to know which appliances you will be liable for, and which you may need to purchase.
IS IT A GOOD IDEA TO BUY A TENANTED PROPERTY?
A tenanted property is widely regarded as a safe investment option as you can start earning income from day one. You can also make sure your tenant is well suited for your property by performing your due diligence by looking at their existing tenancy agreement, the record of making rental payments and how they treat the property.
A tenanted property allows you to be your own boss and is a great way of earning extra income. If this sounds like something you would be interested in, then read on for the investment opportunity for you…
Invest with the best
Are you a first-time investor looking to get involved in the wonderful world of property? Or perhaps you are a seasoned investor looking to expand their portfolio with their next bmv deal? Whatever your reasons for getting into investing, we are here to help.
As a company whose foundations are built upon industry knowledge and experience, we can’t help but be self-confident.
Here at The Property Sourcing Company, we are led by a roster of industry experts who have over 50 years of combined experience in doing BMV property deals, as well as packaging them up for investors.
As quality sits at the heart of our team, we go the extra mile in order to tailor our service to you. We pride ourselves in our ability to source you a wide variety of high-yield property investments.
Get in touch and we’ll establish what type of property you’re searching for, before talking you through our current investment opportunities. We’ll also keep you posted as we acquire new deals.
When you buy your investment property through us and we’ll take care of solicitors, surveys – everything – all to ensure you have a stress-free property purchase. It’s just one of the ways we make investment work for you.
WHAT ARE OUR BTL OPTIONS?
These tend to be normal residential houses, 2 to 3 bedrooms terrace, semi-detached, detached or flats.
They are houses that are suitable for the average renter and are sometimes known as vanilla buy to let properties.
A House of Multiple Occupancy (HMO) is a rented property occupied by at least three people who are not from one household or five or more people, forming two or more households.
This type of Buy To Let is a freehold block which offers multiple, separate or independent residential units.
This can be a variety of different types of property such as blocks of flats or houses converted into flats.
This is very similar to HMO’s and even are often referred to as non-licensable HMO’s.
They have many characteristics of a typical HMO but don’t require the licence, but they may still require planning permission from your local authority.
As the name describes, this is a commercial premises and it is when you let the property out to one or more businesses.
It’s often referred to as Commercial Landlord Mortgage, Business Buy To Let Mortgage or Commercial Investment Mortage.
OUR LOCATIONS
Thinking of buying a BMV property, but have a specific area in mind? To give you an understanding of just how broad your property choice is, here’s the areas where we most regularly buy BMV property…
Start your property journey today
Start your property journey today
EXAMPLES OF PROPERTY INVESTMENTS
Have we got your interest? Well, how do you know that we’re going to provide great deals? Just take a look at some of our recent sales in the area, they speak for themselves!
Want to see more of our deals? Check out our recent deals.
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
Buy Refurbish Rent Refinance
Scunthorpe, DN16
House, Semi-detached Freehold
25% BMV
Yield
8.3%
- Freehold
- Driveway
- Rear garden
- Close to local amenities and transport links
- Could achieve £700 – £750 pcm
- Vacant upon completion
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
AirBnB
Bakewell, DE45
House, Terrace Freehold
22.1% BMV
Yield
15.2%
- Freehold
- Grade II listed
- £51,000 per annum gross rental
- £200 nightly average
- 70% predicted occupancy
- RICS £420,000 in current condition
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Refurb to Flip
Tadley, RG26
Bungalow, Detached Freehold
45% BMV
Exit Profit
20%
- Freehold
- Refurb opportunity
- RICS value £300,000
- Strong demand from owner occupier
- Great transport links
- 50 Miles from London
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
Buy To Let
Bradford, BD12 7DE
House, Terraced Freehold
24.3% BMV
Yield
10.8%
- Freehold
- 4.1 Miles to Bradford City Centre.
- 1.5 Miles to M606 & M62.
WHY SHOULD YOU INVEST WITH US?
We’ll find you the best deal, with the highest yield possible, tailored to your requirements.
We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.
We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio.
WHY SHOULD YOU INVEST WITH US?
We’ll find you the best deal, with the highest yield possible, tailored to your requirements.
We have years of experience in this industry and are part of a group of companies that regularly purchase properties for below market value, in which we can pass the discount on to yourself. We’ll look at every property we purchase, or even get an enquiry for, to determine if it will offer a high yield. If the answer is yes, we can pass the opportunity on to our investors.
We make it easy, doing all the research for you & finding the perfect property to slot into your portfolio.