Selling an investment property at auction

LisaLou1982

Hi all

Just after some advice from those in the know since the agents are shut until the morning!

We have a property which is currently rented out at £550pcm. The house is a 2 bed terrace on a lovely street and has always rented out within days of becoming available. Value wise id expect it to fetch around £95-100,000 which should be more than achievable.

We are looking at putting the property to auction as we do not want to wait the long wait through traditional method of selling, and our tenants currently have until July 2015 left on their 12 month contract. They have, this week, asked if we could extend that contract for a further 6-12 months. We havent acted on that as yet.

Obviously an investor is going to be looking at costs and yields - to anyone who has been in this position from either side, would it be of benefit to sign a new 12 month agreement for the existing tenants prior to sale at auction?

TIA

hostie

I wouldn't buy a property with tenants in situ. They could become squatters. I'm sure there are people who would consider this, but I believe your property would be more attractive to experienced btl landlords if they were in a position to set up all legal agreements themselves from the start.
Advertising that you have tenants willing to stay for another year obviously makes the property more attractive, but advertising something that MUST have these tenants in it, totally limits your potential buyers and will put some buyers off. Obviously anyone who wanted it for themselves would also be put off.

Pixie5740

When selling at auction you set a reserve price so there's no harm in going down this route to see if people are interested in buying with tenants in-situ. If the reserve price isn't met then you can always try selling through an estate agent.

I would think that any investors interested in the property would prefer not to have the tenants signed up for another 12 months. As things are your tenants have a few months of a fixed term left and if things don't work out with the new LL a Section 21 could be issued. Then again some investors prefer vacant possession so that they can select their own tenants but if that's the case they just wouldn't bid on this property.

You don't have to worry about squatters, tenants cannot become squatters.

MisterB1959

95-100k at auction or normal sale? - there are lots of properties bought at auctions with tenants in situ because the properties go for less than the market value, so the buyer can afford to take a 'small hit' if things go pear shaped.


if you sell at market value through conventional channels then your buyer is more likely to want vacant possession