Possible to sell with tenants in situ? (Accidental landlord!)

Philbert

I need some advice.

I’m an accidental landlord with a 2-bed own door apartment in the commuter belt just beyond the M50, renting to a lovely couple for the past four years. It is in a rent pressure zone but I have not increased annually by the 4% as the tenant has always been excellent and trouble free.

I’d now like to dispose of the property but ideally leave the tenants in place as I know to displace them would make life very difficult for them, particularly with a young child.

Rent is €13,200 per annum (€1,100 per month), and a carbon copy apartment sold for €207,000 in June this year. All is good with the apartment, the tenants, the estate and it’s a nice area.

I’d be happy to hand it over to an investor who would be willing to leave the tenants in place for a year at least. Is such a thing possible, and if so, any thoughts on how I would go about this?

Thanks a lot for your help!

NIMAN

If you had a buyer who was to rent the property and who wanted good tenants with a guaranteed income immediately, then it might not be a problem.

But you'd need to sell it as this.

If you sell to a person wanting to move in themselves, then thats a different matter.

endacl

Would the tenants be in a position to buy?

Philbert

Thanks Niman.

I suppose the question really is, how would I go about finding an investor. They are obviously out there, and I wonder if Daft is the right approach or if there is some other way to go about it.

Philbert

endacl wrote: »

Would the tenants be in a position to buy?

We did explore that possibility already, which would have been perfect, but unfortunately it is not an option for them.

hawkelady

Realistically, the answer to your question is no ..
if you really want to sell , go about the proper channels and serve the tenants notice. Good luck

alias no.9

No bank will lend against that property without vacant possession. You'll be limited to private buyers considering buying an investment property with cash who's immediate priority is something other than maximising their return. It's not impossible but highly unlikely.

Are the tenants on HAP/RA or even on the housing list, the reason I ask is that maybe one of voluntary housing bodies (I think that's what they're called) could be approached with a view to them buying the property and keeping the tenants.

Caranica

Banks won't give mortgages without vacant possession so it would have to be a cash investor. Not too many of those around

overkill602

its the tenants home you are selling so it can sell to a limited market where banks wont lend given current tenant law protections any investor would insist on a below market discount and to cover possible rent default that can take up to 2 years of no return might be a long shot @150k

endacl

overkill602 wrote: »

its the tenants home you are selling so it can sell to a limited market where banks wont lend given current tenant law protections any investor would insist on a below market discount and to cover possible rent default that can take up to 2 years of no return.

I think your keyboard may have fallen into a blender...

Mitzy

overkill602 wrote: »

its the tenants home you are selling so it can sell to a limited market where banks wont lend given current tenant law protections any investor would insist on a below market discount and to cover possible rent default that can take up to 2 years of no return might be a long shot @150k

This is utter nonsense. The property can be sold on the open market.

Unfortunately OP as other's have said no lender will provide a mortgage as they require vacant possession prior to releasing funds.
I would suggest that you issue the full legal notice to the tenants & provide the relevant Statutory Declaration of Intention to Sell as the notice periods depend on how long the tenants have been renting the property.
One of the councils might purchase it but if your tenants are private tenants it is unlikely they will be able to stay in the apartment as they will offer it to someone on the housing list.

Samuel T. Cogley

Private buyer will need vacant possession and investors will be put off by the below market rent I'm afraid OP.

rightmove

All the government interference I would probably advise against it. Bad for your tenant but they can thank Simon and eoin

Ste.phen

Mitzy wrote: »

This is utter nonsense. The property can be sold on the open market.

Unfortunately OP as other's have said no lender will provide a mortgage as they require vacant possession prior to releasing funds.
I would suggest that you issue the full legal notice to the tenants & provide the relevant Statutory Declaration of Intention to Sell as the notice periods depend on how long the tenants have been renting the property.
One of the councils might purchase it but if your tenants are private tenants it is unlikely they will be able to stay in the apartment as they will offer it to someone on the housing list.

Poor spelling and grammar aside, that's what I understood from the message you're replying to, not that it *can't* be sold but that without vacant possession there's a limited market for such a property because banks won't lend and investors won't be OK with the risk that the tenants stop paying but also can't be kicked out easily as a result.

TheShow

It is possible, but it limits your market, as not everyone will want to buy a property with tenants in situ.
However estate agents may be familiar with property investors to whom this situation may be appealing, so check around with them.

Philbert

Many thanks everyone for confirming what I already reluctantly expected was the case.

Special thanks to TheShow for a great suggestion and I'll be following up with the local agents on that one.

I know I can give them the 180 days notice and sell it on the open market, but to be honest having been at the receiving end of an eviction notice I know how distressing that can be for a young family in the current market and would like to have avoided it if such a thing was possible.

Its a shame there is no "secondary market" or whatever is the appropriate description which can easily match private (accidental) landlord sellers like me, who are open to a swift and below market sale, with cash buyers. One for the entrepreneurs forum perhaps?!

GGTrek

Philbert wrote: »

Many thanks everyone for confirming what I already reluctantly expected was the case.

.....

Its a shame there is no "secondary market" or whatever is the appropriate description which can easily match private (accidental) landlord sellers like me, who are open to a swift and below market sale, with cash buyers. One for the entrepreneurs forum perhaps?!

As previous poster said: it is not a shame. The system was broken by design by the current and past Irish politicians. You really are unaware of the current (bad) intentions of the Irish political class to prohibit the right to sell a property occupied by tenants as a vacant property.

The only thing that stopped them was article 43 together with article 40-3-2 (unjust attack) of the constitution. Why do you think SF and the left in general want to put a right to housing in the constitution? To get rid of your right to dispose as you please and at the best price of your private property.

Finally just think why an investor would be willing to pay 207k all cash for an annual gross rent of 13.2k that cannot be increased, the 6% gross yield (maybe 2-3% net after tax and maintenance ) is a minuscule reward compared to the massive regulatory risk that the investor is taking.

Small investors in the Irish residential market are very few at the moment and the situation is not going to improve.

sk8board

As a landlord who has bought cash places since the crash, the only things that would tempt me (assuming the place itself was in good condition and passed the usual checks) are:
1. the yield (6.2% on a 2-bed is poor in current market, albeit it’s a good stress test level if it’s a 4 year old rate. You can get that yield on a 3-bed semi, that will be easier to shift in future)
2. a discount to the price. All. Day. Long.

You are costing yourself a lot of money in order to not cause the tenants any distress.
In my eyes, you are a distressed seller, which is great (no offence, obviously!). Expect zero favours from any cash buyer - they’ll smell an opportunity for a deal.

Let me put it to you this way - would you sell it if I offered you €190k? If no, then issue the appropriate notice and don’t feel bad about it.

DubCount

For OP, its a straight decision. Be nice to your tenant or be nice to yourself. Selling with the tenant in place restricts the potential purchasers to cash investors - not good in a property not achieving full market rent. To sell this way will require a significant discount to normal sales price. If you can afford the significant reduction in sales proceeds, be nice to your tenants by all means.

To be fair to yourself and your own family, evict the tenants, and sell to an owner occupier that is not bothered by the rental history.

Unfortunately, kind intentions are not rewarded. A cash buyer can take the discounted price and evict your good tenants to sell at full market price themselves. Our beloved government wants landlords to act as cold businesses, my advice is to bend to their directictive.

Philbert

Thanks all. Decision is clear.

RioSafari

Philbert, I'm similar, accidental landlord, 2 bed apartment, west Dublin, good tenant, young child. We're sale agreed with an investment fund- with the condition that the tenant stays. The catch is that the tenant needs to be in HAP, so as she wanted to join the scheme and we wanted to sell, we signed her up and we're waiting on last legals now to close the sale. We got a referral from Threshold to the agent of the fund (a UK fund) here in Dublin.

Philbert

RioSafari wrote: »

Philbert, I'm similar, accidental landlord, 2 bed apartment, west Dublin, good tenant, young child. We're sale agreed with an investment fund- with the condition that the tenant stays. The catch is that the tenant needs to be in HAP, so as she wanted to join the scheme and we wanted to sell, we signed her up and we're waiting on last legals now to close the sale. We got a referral from Threshold to the agent of the fund (a UK fund) here in Dublin.

Thanks RioSafari, very interesting indeed. My tenants are not on HAP but surely would be if they were evicted and were facing market rental rates in such a competitive market. I'll write to Threshold today to see if this is an option.

RioSafari

The Irish agent is New Beginnings and Threshold referred me straight away. PM me if you want more info..