Pros and Cons of Buying a Property with Sitting Tenants: A Guide for Landlords
Choosing whether to buy a property with sitting tenants can be a tough decision. It offers immediate rental income and potential cost savings, but also presents unique challenges that require careful consideration. This article explores the pros and cons of buying a property with sitting tenants, what to look out for and tips on safeguarding your investment while ensuring a smooth transition from the previous landlord.
Pros of Buying a Property with Sitting Tenants
1. Immediate Rental Income
One of the main advantages of acquiring a property with sitting tenants is the immediate rental income. There’s no need to search for tenants, as the property is already generating revenue. This can enhance your cash flow and provide financial stability from the outset.
2. Cost Savings
There are cost savings too. Houses with sitting tenants cost an average of 15% less than others. You won’t need to splash out on marketing and tenant acquisition costs straight away. Since the tenancy agreements are already in place, there’s no need for advertising, tenant screening, or negotiating new leases. All of which can be expensive and time-consuming.
3. Established Tenancy
An established tenancy can indicate that the property is desirable and well-maintained. Long-term tenants are often a sign of tenant satisfaction, suggesting that the property meets their needs and expectations.
4. Reduced Vacancy Risk
With sitting tenants, landlords are less likely to face the uncertainty and financial strain of vacant periods. The continuity of tenancy ensures a steady stream of income without the downtime associated with finding new tenants.
Cons of Buying a Property with Sitting Tenants
1. Inherited Tenancy Issues
Acquiring a property with existing tenants means inheriting any ongoing tenancy issues. This can include disputes, arrears, or problematic tenants. These issues can be challenging to resolve and may require legal intervention.
2. Limited Control Over Terms
As the new landlord, you must honour the existing tenancy agreements with sitting tenants, which may not align with your preferred terms or conditions. This limits your ability to adjust rent, change tenancy terms, or implement new policies until the current agreement expires.
3. Potential for Tenant Resistance
Tenants may be resistant to change, especially if they had a good relationship with the previous landlord. Establishing rapport and trust with sitting tenants can take time and effort, and any changes in management style or property upkeep may be met with resistance.
What to Look Out For With Sitting Tenants
Tenancy Agreements
Carefully review the existing tenancy agreements to understand the terms and conditions. Ensure you are aware of the rent amount, payment schedule, tenancy duration, and any special clauses, responsibilities, or conditions. Confirm that the agreements comply with current legal standards.
Tenant History
Obtain a comprehensive history of the sitting tenants, including payment records, any disputes or complaints, and maintenance requests. This information can provide insight into tenant behaviour, potential issues that may arise, and how issues have been resolved previously.
Property Condition
Conduct a thorough inspection of the property to assess its condition. Note any necessary repairs or maintenance that may be required. Ensure that the property meets all health and safety standards and budget for any expenses that might occur.
Compliance with Regulations
Ensure the property complies with all relevant regulations, including gas safety, electrical safety, fire safety, and energy performance. Verify that all necessary certificates and inspections are up-to-date.
Tips for Achieving a Smooth Transition
Arrange a meeting with the tenants to introduce yourself and address any concerns they may have. Building a positive relationship from the outset can create a smoother transition.
Aim to maintain continuity in property management and upkeep. Avoid making immediate changes that could disrupt the tenants’ living conditions or routines.
Honour the terms of the existing tenancy agreements. Any attempts to alter the terms prematurely can lead to disputes and legal complications.
Consider engaging a professional property management service if you are unfamiliar with managing tenancies or if the property requires extensive oversight. A professional manager can handle day-to-day operations, ensuring legal compliance and tenant satisfaction.
Outsource Property Management
We provide an expert and professional property management service for landlords and letting agents. If you have sitting tenants, consider our full package to handle any daily property management issues. Save time chasing references and chasing rent arrears so you can focus on growing the business. We will take care of everything so you don’t have to. Call 0208 5757630 to find out more.
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