Due diligence on buying a property with a tenant in place?Make Text Bigger
My business partner and I are about to purchase our first buy to let property – a one bed flat in Southsea with a tenant in place.
We are keen for the tenant to stay on (he has indicated he is happy to) so what is the best way of handling deposits and AST’s in this situation?
The solicitor has advised that as long as some sort of AST is in place, the mortgage company will be happy.
The managing agent (who is also handling the sale) has told us that his deposit will not be returned due to extensive cleaning required (fairly dirty tenant who smokes). Our concern is that the tenant might struggle to find another deposit for us, when we buy the property.
Has any one had experience of this situation before? Although on the face of it this sounds less than ideal, we are happy to buy the flat in a ‘dirty’ state if the tenant is happy to stay, as he is paying good rent and is a reliable payer apparently.
Whenever he moves out, we have factored in around £4k refurb as it will need a new kitchen/carpets and redecoration of at least one room.
Our plan is to try to get a new 1 year AST in place prior to Exchange or completion, to minimse our risk and guarantee cashflow prior to a subsequent refurb in (for example) 12 month’s time. However we won’t have a date of commencement for this AST until a completion date is known so I am wondering how feasible this is?
Any other suggestions of how to minimise risk in this situation, prior to incurring cost of solicitor/IFA/surveyor would be appreciated.
Is it appropriate to ask the managing agent for records of payment history and any disputes?
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