Sell apartment with or without tenant in situ?

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1eyeonthefuture

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We are selling our investment property to aid the purchase of substantial forever home.
The tenants we have are excellent (are there coming up to 1 year) and the rent paid provides 7.5% return.
I am very hesitant to exit the tenant as the move has been prompted by circumstances not of thier making whatsoever, and I'm very conscious of the great difficulty they would have in finding another place, therefore would there be any argument for selling with tenant in situ.??
 
Maybe being able to provide payment of all rents would help. Cannot see a problem if it's in a good area, realising it's rental level allowed and with easy rental procurement going forward. Just my take on it.
I'd also let the tenants know, they might be buyers.
 
It will be very hard to find a buyer with a tenant in situ. I doubt you'll even find an estate agent to list it.

The best you can do is give the tenant first refusal on purchase. If they can generate a gross yield of 7.5% they may well get a mortgage to fund purchase.
 
The tenants won't object but you are excluding all buyers who would be owner occupiers. So are you excluding 80-90% of possible buyers??? Any reduction in the possible buyers will mean a lower selling price for you.
 
Agree that it will reduce the potential buyers and so will reduce the price.

But if you have a price in mind, you could try selling it with the tenants in situ. If you don't get the price it's worth, then tell them to leave and sell it.

Or tell them now that you plan to sell it and they should look around, so they get plenty of time to search.

Brendan
 
I used the term "tenant in situ" on daft.it and there are a few examples, however it's mainly at development level where AFAIK you cannot terminate tenancies in bulk on the grounds of wanting to sell. There are very few small-time landlords looking to sell with the tenant in place.

@1eyeonthefuture - I would give the existing tenant a discount of up to 10% if they can buy privately. There are a few financial and non-financial savings for you:
  • No estate agent and advertising fees (could save you 2% of value);
  • No need to clear out house and tenant might buy furniture (could net you 2% of value);
  • No need for any cosmetic repairs or cleaning in advance of viewings;
  • Tenant will pay rent right up to day of sale, if you terminate tenancy and put house on market you could be 4-6 months without rental income (3%-4% of value);
  • No dealing with estate agents or vendors .
 
Sit down and have a chat with them. They'll be a bit cagey, so will you. Soon enough you'll cop on as to whether they're potential buyers or not. Even if they aren't they may know someone who could be. As the old advert once said, "It's good to talk", but make sure you're good at it, it's an art in itself :)
 
If you have made the decision to sell, as you seem to have, then you should not mess about.
As you say it's an investment property, so you (should) want to maximise your return on your money.
You don't mention a timeline on your purchase of your new house but consider notice periods.
Trying to consider a side deal with a party of unknown intentions is crazy and could eat up time and leave you in the same position as you are now.
If you give notice now to terminate the tenancy- it will be 90 days , but goes to 120 days if the tenancy exceeds 1 year.
It is a good time to be selling a property so why limit your options by not putting the property on the open market?
This is not meant to diss your or others' good intentions, I just cannot see why any of the above is being considered.
 
There have been a few of these on various sites recently, usually noted by the asking price being significantly below normal market rates. One of the questions my solicitor asked on my first purchase attempt was whether or not there was a tenant in situ - so I would at least discuss it, and if you do decide to sell with them in situ at least ask them if they would be interested in buying. If you go ahead and sell with a tenant in there it seems many solicitors will advise their clients to not go ahead. It would certainly put me off as a buyer as I would suspect you have a "difficult" tenant you couldn't evict through the normal eviction process. I'd suggest to start by offering it to sell to the tenant (which would save you some selling costs). As someone rightly says, if they are there more than 5 or 6 years there is a quite long notice to quit anyway. If you sell with them in situ expect it to take longer to sell and lower selling price, probably less that the tenant, if they can afford, is willing to pay.
 
It
JMJR said:
If you have made the decision to sell, as you seem to have, then you should not mess about.
As you say it's an investment property, so you (should) want to maximise your return on your money.
You don't mention a timeline on your purchase of your new house but consider notice periods.
Trying to consider a side deal with a party of unknown intentions is crazy and could eat up time and leave you in the same position as you are now.
If you give notice now to terminate the tenancy- it will be 90 days , but goes to 120 days if the tenancy exceeds 1 year.
It is a good time to be selling a property so why limit your options by not putting the property on the open market?
This is not meant to diss your or others' good intentions, I just cannot see why any of the above is being considered.
Click to expand...
if the tenant is there more than 3 years it goes quickly to 180 days and over 8 years 224 days (or 9 months).
So why not see if you can sell to the tenant - it might not be the highest price, but avoids estate agent fees and a long vacancy as they pay rent right up to the day of the sale.
 
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