The benefits of purchasing tenanted property

When you think of buying an investment property, you might picture an empty house for you to revamp and put onto the rental market ready for a new couple or family to move into, but this does not necessarily need to be the case. You can buy a property that already has tenants in situ, and the benefits of this can be huge.

Here, Portfolio 8, specialists in buying and selling tenanted property, take a look at what it means to buy a property which has its own tenants and why it can sometimes be a better option.

Buying a tenanted property

As an investor, you can buy a property that is fully compliant and already has tenants living in it. It can cut out much of the work that you would normally be expected to do and has a rental contract in place from the minute you complete on the property. The tenant will have been brought in by the previous owner, and their tenancy will be passed on to you, either because they are a good tenant or because the property is being sold at a point in the tenancy where the tenants cannot be evicted.

Whilst you will need to do your research before taking on someone else’s tenants, there can be a range of benefits that make it a viable and attractive option.

Immediate cash flow

Normally when you buy a property, you will need to spend time working on it before you can advertise it as being available to rent. This can mean that you can wait for months before you start receiving any money, which can often be tough on the purse strings. With a tenant in situ, you can start earning a rental yield right away, as there will be no vacant periods.

Tenant research

When a tenant becomes interested in letting your property, it can be difficult to know what you are getting yourself into. Whilst you can ask for references, this rarely forms the whole picture, particularly if they have not rented before. When buying a property with a tenant in place, you can check their whole history before you make the leap. You will be able to check whether they have paid their rent on time and in full as well as seeing whether any complaints have been made about them or by them. This means you will have a much better idea of what you are getting into and whether this is the right deal for you or not.

Compliance

As a landlord, you have certain legal responsibilities to ensure that your property is safe and habitable. It can take time and money to ensure that these boxes are ticked, but by purchasing a tenanted property, you know that they already have been. Whilst you might have minor alterations to make or maintenance to perform on the property, you should be able to see that all the necessary documentation is in place, and this can simply be transferred to you as part of the sale.

Fixed prices

When you buy a property which has a sitting tenant, you will often find that it is available at a fixed price. This means that you will already know what the final cost it likely to be without worrying about hidden extras and bidding wars.

A good tenant is like gold, so buying a property that already has one in place can be incredibly valuable. Much of the hard work and stress is taken out of the process for you, and with a little homework, you can eliminate many of the crucial unknowns that other property investors tend to face.