Buying or Selling Tenanted Property?

Anticipated launch April 2015 – basic concept explained below 

As you may be aware, thousands of new property investors are expected to flood into the market when the new pension rules come into effect, allowing them to cash in their pensions and to invest elsewhere as an alternative to purchasing an annuity. We believe this will create a huge demand from people looking to acquire tenanted properties. Accordingly, we are launching a new property portal to fill this demand, which will be FREE for buyers, sellers and agents to use.

Once our “Buy or Sell Tenanted Property” service is launched, landlords will have an effective solution to advertise or purchase tenanted property for sale and buyers will be able to set up email alerts so they are notified when a property matching their purchasing criteria is listed. Agents may also participate.

When a landlord considers selling a tenanted property via conventional means he is immediately faced with a list of dilemmas:

1)      Will my tenant cooperate with viewings?

2)      Will my tenant move out and leave me with a rental void and negative cashflow?

3)      If the property is unoccupied what will happen to my insurance cover?

However, if/when a tenant learns that the property is only being marketed to other landlords his perception of the sale of the property is seen as far less of a threat, and the intended sale is much less likely to lead to rental voids. Tenants do not even need to know the property is for sale until an potentially interested buyer is found. This is because we will not provide the property name/number in the advertisement, just the street, town and postcode. Details of the owner and the full property address will only be revealed to serious enquirers if the owner chooses to release them.

Property118 is the ideal website for landlords to sell their tenanted properties because it is one of THE “go-to” websites for anybody operating in the Private Rented Sector. In other words, potential buyers are already here.

Purchasers will also be able to register for new property alerts when a new listing is published within a given radius of a their preferred postcode, similar functionality can be found on Rightmove and Zoopla but only for property being sold with vacant possession.

Property118 isn’t an estate agency and will not charge commission. Landlords and agents needn’t pay for advertising either, listing a tenanted property for sale will be free.

A key feature for purchasers will be the convenience of being able to purchase a pre-tenanted property, thus mitigating rental voids that are inevitable following a purchase with vacant possession. A major consideration for any investment purchaser will be returns, which come in two forms, i.e. rental profit and capital; appreciation. One of the most useful guidelines used by investors is gross rental yield, which will be auto calculated for them. 

A “yield assessment” will be auto-calculated by our systems and displayed on all listings in accordance with the following table. Note the calculation for rental yield is; monthly rent X 12 divided by asking price X 100.

Low rental yield < 6%

Average rental yield = >6% <8%

High rental yield = >8 <10%

Very high rental yield = > 10%

The above will appear in thumbnails and full property details “in the following format”.

Low rental yield < 6%  “The rental yield on this property is X% which is considered low. However, you also need to consider the prospects for capital growth because low yielding properties often appreciate in value quicker”

Average rental yield = >6% <8% “The rental yield on this property is X% which is about average. However, you also need to consider the prospects for capital growth because lower yielding properties often appreciate in value quicker”

High rental yield = >8 <10% “The rental yield on this property is X% which is about average. However, you also need to consider the prospects for capital growth because lower yielding properties often appreciate in value quicker”

Very high rental yield = > 10% “The rental yield on this property is X% which is about average. However, you also need to consider the prospects for capital growth because lower yielding properties often appreciate in value quicker”.

Buying a tenanted property isn’t without its challenges, e.g. how to deal with deposit protection, notices, checking the tenancy agreement etc. As you may expect, we have that covered too.

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The above is just a short overview of some of the functionality we are working on. We will of course provide advance notification to all Property118 Members as soon as the platform is operational and certainly before the official launch. It is also FREE to become a Property118 member 🙂

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