When starting out in buy to let with limited time to devote to sourcing and tenanting a suitable property, one option to consider is to buy a property that is already let and has tenants in situ.
This comes with a number of benefits:
1. A tenant is already in situ, so no void on completion of the sale. You can take over the tenancy and tenants from the previous landlord.
2. You can ascertain the exact amount of rent you will be receiving, and therefore “stack” your deal very accurately and have a clear understanding of your positive net cash flow at the end of each month.
3. You can check to find out if the tenant pays on time, and has a track record of doing so.
4. You can ask for costs associated with running the property, which will enable you to understand your investment better.
5. You may inherit a lettings agent, and can gain insights into how well they have been managing the property.
6. You may be able to secure a discount from market value, as rental properties may not always “show” in their best light and tenants have a right to “quiet enjoyment” and may not be amenable or available to allow lots of viewings.
7. You can ascertain how long the tenant has been in situ, and how long previous tenancies ran for. This will enable you to estimate the demand for this type of rental property.
8. You will know your tenant from Day 1 and can establish a healthy working relationship with them on completion.
9. If you are living abroad, this may be the simplest and most efficient way for you to invest in the U.K. BTL market.
10. Buying a tenanted property means a new landlord’s investment is already providing a return as soon as they become the legal owner.
Tenanted properties are sold for many reasons, but often because the landlord is simply exiting their investment, and they would prefer not to experience a void while waiting for the property to sell.
However, it would be a good idea to understand the reason the landlord is selling and undertake extensive due diligence on the property and the area to make sure there is nothing coming down the pipe that might affect your investment in the future.
If you are using mortgage finance, you will also need to get a BTL mortgage through a lender that offers mortgages on tenanted properties. Surprisingly, there are not very many that do, so it would be advisable to speak with a reputable mortgage broker to find out the best financing options for such an investment.
Northwood recently launched our Investor List to help new landlords find tenanted properties, some with Guaranteed Rent in place. These properties are, on occasion, being sold by our existing landlord clients, so we will often already have a management relationship with the property and can assist you with your due diligence.
The Investor List gives new landlords an indication of yield, as in our opinion, this is the key metric for landlords to focus on when ascertaining the viability of any property investment.
Northwood M.D., Eric Walker, explains how our “Investor list” is growing:
Search our Investor section for tenanted properties >>> here.
We ensure that the entire process of buying and letting property is as simple as possible, making it easier to enjoy the benefits of buy to let property investment.
Our 85 offices around the U.K. are always happy to have an informal chat and guide you on rental prospects in the area, using their extensive local knowledge and experience.
Northwood is a leading supplier of Guaranteed Rent across the UK, giving landlords complete peace of mind that their rent will be paid each and every month.
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IMPORTANT NOTICE: Northwoood does not provide investment advice. All figures quoted are correct at the time of listing and published in good faith. Whilst property has proven an excellent investment over many years, past performance is no guarantee as to future performance. You are strongly advised to obtain independent financial advice from an Independent Mortgage Advisor (IMA) in respect of any mortgage product required and independent legal advice as necessary.