Tenants

tbs624

mrtazz wrote: »

Thanks for all the info. the contract ends 2.1.2012...

No, the *Fixed Term* of the contract ends then. Housing Act allows for a statutory periodic tenancy to arise if no new fixed term has been signed up for, there is no court order in place and T chooses to stay put. Even once notice has been appropriately served T does not have to go until a court order says he must.

The T may be up for doing a deal but equally they may not: the property is after all their home and they may not take kindly to your attempts to oust them.

You would be taking a massive risk buying on a bridging loan, on a property with a T in situ, with you hoping to make a fast buck. Have you budgeted for the scenario of the T say losing his/her job, failing to move on and being late with the rent/not paying at all? Do you have a contingency fund for any repairs that may become necessary before the T has been properly served with notice and exited the property?

mrtazz

i will not buy the property if the tenants plan to stay. i will speak to the tenants as soon as i can. i have an appointment tomorrow to go through bridging loans and get more info. so what do you think i should do. i have no probs with the 10% deposit at the hammer price. i cant get a mortgage at the moment because the mortgage people have to asses the property. i am hoping the tenants will agree to leave. plan a is to apply for a mortgage and if that doesnt work then a bridging loan.

after winning at auction. i have 28 days to clear the rest of the payment. how long does it take to get a mortgage approved and what do they look at when they are accessing the property and why would a mortgage lender refuse to lend?

islandlass

Be careful though! If they are in the fixed term they can say whatever the like then decide not to go and there is nothing you can do. I even had a written surrender and it was not worth the paper used when the tenant changed his mind! I would also want sight of the AST - are you POSITIVE that they do not hold any other form of tenancy? My view is either buy with vacant possession or get a big discount for it being tenanted (but only after seeing the AST!)

BitterAndTwisted

Do not buy this property! It could result in financial suicide for you.

hazyjo

mrtazz wrote: »

so what do you think i should do

Do not go to the auction! You cannot guarantee a mortgage - it would only be a BTL mortgage anyway and then you would have LL responsibilities. It's doubtful you would get a bridging loan and if anyone says they'll give you one - run away fast! It would cost you a fortune.

'Head' and 'brick wall' are springing to mind here...

Jx

bris

BitterAndTwisted wrote: »

Do not buy this property! It could result in financial suicide for you.

Agreed, without a mortgage in principal you will really struggle to meet the 28 day deadline. The penalties for missing the deadline are severe.

Gwhiz

My god, if ever I have heard of a certain recipe for disaster with a cherry on top, this is it!

GDB2222

mrtazz wrote: »

after winning at auction. i have 28 days to clear the rest of the payment. how long does it take to get a mortgage approved and what do they look at when they are accessing the property and why would a mortgage lender refuse to lend?

You need to have a survey done, a mortgage or bridging loan agreed in principle, all the legals done, BEFORE you bid.

scottishblondie

To sum up:

1. Bridging loans typically have interest rates of 12% or more, plus very large arrangement fees. This alone could wipe out any profit.

2. You will need a deposit of more like 25% to get a BTL mortgage.

3. You won't get a residential mortgage with sitting tenants so 1 and 2 are your only options.

4. There is no way to get the tenants out before the end of their fixed contract, and if they don't leave it takes months to get a court order. Even if they say before the auction that they are happy to leave early, you can't make them sign anything legal, potentially leaving you with 6+ months of repayments and all the legal obligations of a landlord before you can even get into the the property to look at starting renovations.

5. It is nigh on impossible to get the financials sorted out in 28 days, it all needs to be done beforehand. If you go in without it sorted you risk losing your deposit.


IMHO you had best give up on this idea before you lose a lot of money on it. It sounds like you don't have a clue about what the whole process entails, especially with the property being sold with sitting tenants. Do your research and only go back to property development when you know what you are doing.

dotchas

I would assume that the vendor has already asked the tenants if they would leave before its sold as he would get a better price with vacant possession.
Even as a BTL I would rather chose my own tenants!
Your plan is a recipe for disaster,sorry.