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Sell apartment vacant or with tenant in situ

  • 17-04-2022 8:32am
    Registered Users Posts: 41 Catglee

    We are selling our investment property to aid the purchase of substantial forever home.

    The tenants we have are excellent (are there coming up to 1 year) and the rent paid provides 7.5% return.

    I am very hesitant to exit the tenant as the move has been prompted by circumstances not of thier making whatsoever, and I'm very conscious of the great difficulty they would have in finding another place, therefore would there be any argument for selling with tenant in situ.??


  • Registered Users Posts: 5,842 ✭✭✭ SteM

    My understanding is banks won't allow drawdown on a mortgage unless a property is vacated, so you'll be limiting to selling to cash purchasers.

  • Posts: 18,749 ✭✭✭✭ [Deleted User]

    Or investment companies.

    Why not try to sell with the tenants in place first? If it proves difficult, then go down the route of vacating the property?

    that is of course if time is not a factor.

  • Registered Users Posts: 947 ✭✭✭ DubCount

    Selling with tenants in situ is madness.

    You are ruling out the property being purchased by someone to live in themselves - they wont want the difficulty of removing tenants. Banks wont extend a mortgage unless the property is purchased with vacant possession. So you're looking to sell to a cash investor only. Even if you find an investor who wants your property and has the cash to buy without a mortgage, they will be suspicious that you are selling with tenants in situ because these are problem tenants that were too difficult to evict. All in all, you're looking at 20-40% discount over what you'd get if you evicted the tenants first.

    There's no place for a nice guy in the Irish Landlord game.

  • Posts: 18,749 ✭✭✭✭ [Deleted User]

    Maybe the tenants would be in a position to buy the property themselves?

  • Registered Users Posts: 5,842 ✭✭✭ SteM

    If i was looking to pay a lot of money up front for an investment property I'd want to decide who was in the place to be honest.

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  • Registered Users Posts: 371 ✭✭ jim-mcdee

    I purchased a buy to let in 2018 that had existing tenants. Maybe things have changed since then.

  • Registered Users Posts: 1,453 ✭✭✭ sam t smith

  • Registered Users Posts: 371 ✭✭ jim-mcdee

    Yes with a buy to let mortgage.

  • Registered Users Posts: 11,970 ✭✭✭✭ Dav010

    You are probably the first person to ever post they have been able to do this. It is an almost universal requirement for the property to be vacant before a lender will allow drawdown. Who did you get your mortgage from?

    Op, as others have stated, you would be severely limiting prospective buyers by selling with a tenant in situ. Immediately you will lose anyone who requires a mortgage, and anyone who is buying to live there. Even investors buying to let would prefer a vacant property which can be advertised/rented at market rate though this may not comply with tenancy legislation.

    Effectively your buyer will have to be a cash buyer willing to take on a property with existing tenants and accept that rent will never reach market level.

    Though your tenants may be good, they are paying for a service you are providing, this is a business arrangement, not a friendship, so time to serve notice.

  • Posts: 18,749 ✭✭✭✭ [Deleted User]

    If you are buying a house to live in, a lender will only lend if it's vacant.

    A buy to let mortgage is a completely different affair

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  • Registered Users Posts: 2,797 ✭✭✭ mikemac2

    Ask the tenants if they want to buy

  • Registered Users Posts: 371 ✭✭ jim-mcdee

    Who did I get my mortgage with? That's a different discussion. I think everyone knows it's better to sell it vacant but it's not true to say you can't get a mortgage unless it's vacant. It is possible for an investor. Obviously not for an owner occupant.

  • Registered Users Posts: 947 ✭✭✭ DubCount

    A lender will view a sitting tenant as higher risk. The purchaser is taking on all the responsibilities of the previous landlord, and who knows what hidden legal obligations there may be. Also, they will also be wondering why the previous owner decided to limit their potential market by keeping tenants in situ. You may get a specialist lender who will likely want a higher deposit and/or higher interest rate. Most lenders will just specify a requirement for vacant possession.

  • Posts: 18,749 ✭✭✭✭ [Deleted User]

    An investment property is Just that, it's looked at differently to a home purchase.

  • Registered Users Posts: 2,379 ✭✭✭ endofrainbow

    sorry for jumping in on this but what would be the situation whereby a house-share has just gone sale agreed. All tenants have varying lengths of occupancy (the longest over a year) so what would be the terms of notice to leave be? Would there be a difference between someone there 3 months and someone there a year plus? Or would there be a standard applicable to all?