Buying a Tennanted Property - Is it worth it?

sondy

My fiance and I are looking to purchase our first property soon. We would like to move in by next July. We are in the fortunate position of being cash buyers with a maximum budget of £140,000.

A few properties we have seen online seem to fit the budget and location that we want and are tennanted until early next year. My fiance wants to look into purchasing these to make use of the rental income and then using that money to refurbish and for us to move in together when the tenants move out.
I'm wondering whether this would make us responsible for the maintenance, management of the property (neither of us have time for this at the moment) and whether we would have to pay additional fees, take out landlord insurance etc?

We are both totally clueless on this - does anybody have any input?

Pixie5740

Yes, if you buy a property with tenants in-situ then you become their landlord with all that entails. Maintenance, gas safety, insurance, income tax, to name but a few. Who else did you think would be responsible for the maintenance after you bought the place?

Have a read at G_M's guide for New Landlords to get a better idea of what your responsibilities would be.

You would also have to factor in the cost of getting the tenant out of the property when you want to move (assume worst case scenario of court and bailiffs in your budget) and check that the deposit was properly protected and signed over once you complete.

G_M

As well as all the responsibilities of being a LL (as per pixie's post above + my link), before buying you should do 'due diligence' on both the tenants (eg are they reliable?) and the tenancy (eg is it an AST?).

By all means go ahead, but do it with your eyes wide open, your understanding of the finance, the law, the tax etc fully up-to-date, and bear in mind tenants don't always leave when you want, or expect, them to.

* Tenancies in Eng/Wales: Guides for landlords and tenants

ps - if you plan on becoming a landlord, learn how to spell 'tenant'!

Lord_Baltimore

To summarise all the excellent info provided by Pixie and G_M, and to use your words: a clueless person with no available time should not buy tenanted property. 'Landlording' is a responsible and time-consuming job even if you use a letting agent (who will cream off a chunk of your profit).

It is your intention to move into the house so buy with vacant possession; as an FTB, you can do without getting your fingers burnt.

HappyMJ

Also, if you have no intention of moving in on completion then you have to apply for a BTL mortgage which has application and processing fees of around £2,000 and higher interest rates then when you move in you must change the mortgage to an owner occupier mortgage as moving in without changing it you would be in breach of the T's and C's of the BTL mortgage.

It's not a short term plan. It's something you really need to think about as the investment costs should be spread over several years to be worth it.

mrginge

HappyMJ wrote: »

Also, if you have no intention of moving in on completion then you have to apply for a BTL mortgage which has application and processing fees of around £2,000 and higher interest rates then when you move in you must change the mortgage to an owner occupier mortgage as moving in without changing it you would be in breach of the T's and C's of the BTL mortgage.

It's not a short term plan. It's something you really need to think about as the investment costs should be spread over several years to be worth it.

OP states that they are cash buyers.

Pete9501

Ask yourself why is it for sale?

Pete