Selling a flat with a sitting tenant

Deligirl5

Does anyone have experience of companies that advertise buying your property for cash with a sitting tenant? We know they cut the value significantly but we can’t easily get our bankrupt tenant (initially a friend) out so it looks inviting. Is it too good to be true?

user1977

Yes, landlords will buy properties with existing tenants, but you're going to get a better price by marketing it rather than going to the "we buy any house" types (who in reality are just middlemen taking a cut).

MattMattMattUK

Deligirl5 said:

Does anyone have experience of companies that advertise buying your property for cash with a sitting tenant? We know they cut the value significantly but we can’t easily get our bankrupt tenant (initially a friend) out so it looks inviting. Is it too good to be true?

They will make a lower offer anyway because that is how they make a profit and if there is a sitting tenant who needs evicting they will factor that in as well, so if it was a £250k flat their initial offer would probably be around £200k, they would then factor in needing to evict the tenant which might cost them £20k with the legal process and lost rent so will probably knock another £40k off their offer for your trouble. So if you want to sell for 30-40% less than open market then you can probably find one willing to buy, or alternatively you just take the legal route, evict the tenant and sell on the open market. 

Deligirl5

Thanks. We were foolish enough to think we didn’t need an agent renting to a friend. Solicitor has advised eviction could be long and costly. 

Herzlos

Deligirl5 said:

Thanks. We were foolish enough to think we didn’t need an agent renting to a friend. Solicitor has advised eviction could be long and costly. 

Significantly less costly than selling to a house buying company though. If you don't need the cash in the short term, I'd go down the eviction route.

Whilst eviction sounds horrible, they almost certainly need to be evicted for the council to help them with a new place.

FlorayG

Deligirl5 said:

Thanks. We were foolish enough to think we didn’t need an agent renting to a friend. Solicitor has advised eviction could be long and costly. 

Yep, renting to a friend is always a mistake, but honestly having an agent wouldn't have made any difference if your 'friend' is now refusing to leave. I would try advertising it with a tenant in situ and sell to another LL. Advise the 'friend' that its in their interest to be helpful with viewings, keeping tidy etc. because if you can't sell it then you're going to go the legal route for eviction for which the TENANT is liable for costs, whereas if you sell to another LL they will be able to stay, anyone buying with tenant in situ WANTS a tenant
Note - advertise 'tenant in situ' NOT 'sitting tenant' they are legally different things!

Flugelhorn

is your friend still paying rent? surely anyone buying would not want to take on such a liability, they would have the same problems in evicting them

FlorayG

Flugelhorn said:

is your friend still paying rent? surely anyone buying would not want to take on such a liability, they would have the same problems in evicting them

Ah, good point. Prospective LL will want a GOOD tenant. If rent isn't being paid then go for eviction, the increased value of the property empty will more than cover your costs if the ex-tenant can't pay them

Albermarle

What is the state of your relationship with the tenant ( poor obviously but how poor?)
Could they be 'financially incentivised' to leave ?

MattMattMattUK

Deligirl5 said:

Thanks. We were foolish enough to think we didn’t need an agent renting to a friend. Solicitor has advised eviction could be long and costly. 

Any third party will have to go through the same process, they will have similar costs to you but will also factor in their time as well on top and will value their time in the tens of thousands of pounds. 

Albermarle said:

What is the state of your relationship with the tenant ( poor obviously but how poor?)
Could they be 'financially incentivised' to leave ?

I agree with this, £5k to leave and never come back will be cheaper and quicker than eviction. Start the eviction process, go hard at them, threaten them with back rent, plus interest at 8%, plus costs, then give them the option of leaving with a pay off to make things easier. Give them the nice option, if they refuse to play ball then crush them.

MeteredOut

MattMattMattUK said:

Albermarle said:

What is the state of your relationship with the tenant ( poor obviously but how poor?)
Could they be 'financially incentivised' to leave ?

I agree with this, £5k to leave and never come back will be cheaper and quicker than eviction. Start the eviction process, go hard at them, threaten them with back rent, plus interest at 8%, plus costs, then give them the option of leaving with a pay off to make things easier. Give them the nice option, if they refuse to play ball then crush them.

Tenant is bankrupt - I'm not sure the threat would encourage them. And even with £5K offer, as a bankrupt, they'll presumably know they might struggle to get another rental, so I can imagine they'll sit tight until forcibly evicted.