Rerenting back to old owner

[odecar]

Have got a couple of options I'm considering at the moment.

1st property is one where owners have recently split up, owned for approximately 2 years and female with little one wants to rent off whoever buys the property with the DSS paying majority of the rent. She wants to stay as its her and her sons home.

2nd Property is one where couple have lost lots of money on a bad mortgage deal and selling but want to remain in the house. They have lived there for 7 years already and want to stay.

Both properties will be at market rent and while I have 2 other properties in same town I will probably just get the agency to do the agreements and manage myself as feeling they will not require much managing.

Feeling on second one is to build in for a rent increase after 3 years of £50 a month but put it upfront to them to redecorate the house in the first year.

Views or downsides to either option.

[BTLWhizz]

I couldn't imagine renting to an ex-owner. Not saying that it's a bad idea for others, but I would find it difficult to believe that ex-owners wouldn't continue thinking of it as "their" house, which could cause problems down the line.

[Trenners]

Hi odecar,

Dealing with the local council can be difficult ... Housing Benefit departments are often "faceless" and getting DSS claims processed correctly, efficiently and timely is a nightmare ......

Having said that .... the DSS tenant is likely to be very long term because she is looking to rent a home to bring up her child and the local authority have a duty of care to house her (because of the child).

I have built a very successful BTL business by renting to single mums ... the only problem is that they tend to have the words "gullible" tattooed on their foreheads ... meaning that they never change their taste in "dodgy" boyfriends / partners / husbands ........

Good luck,

Mark

[Simon Dewsberry]

Hi Odecar

not to keen on either idea ! but if you must-

If 2nd couple have lost a lot of money why would they want to then pay more out on rent than they would on a mortgage (assuming you are going to charge them more !) and lose even more money ?

Need to find out more about the logic behind this ?

First one is an accident waiting to happen as Trenners has so eloquently put it ! Although, as he also points out probably a long term tenant !

If i were entering into either deal i would insist on full referencing first with a cast iron gaurantor on deal 1.

Also i would negotiate one years rent plus a bond up front payable on completion (financed from their equity) and have an agreement in place that the first year is rent paid for them - then at least you know you will have no financial worries on rent for a year- then re- assess at this time.

Or you could put them on half rent for 2 years (with the 1 in the bank already - maybe very attractive to them if cash flow is problem for them!!)(if mortage conditions limit you to 12 mths back to back 2 x 12 mths)

I would actually negotiate as much out of them as they could bear - if there is enough equity available to decorate the house and pay 3/4/5 years rent i would chase it as long as the vendor has a couple of grand they will prob be happy ! Needs a good fact find on both sits. Although on 1st sit partner will certainly want his half of equity unencumbered.

You know me !- Find their motivations and Get creative !!

Find what works for both parties and if you like it (figures!!) do it !

Simon

PS It should be rembered that you are in a fairly strong position when negotiating as most buyers will want vacant possession and this is clearly not what either of these vendor's motivations are !

[bravesocks]

Hi Odecar

not to keen on either idea ! but if you must-

If 2nd couple have lost a lot of money why would they want to then pay more out on rent than they would on a mortgage (assuming you are going to charge them more !) and lose even more money ?

Need to find out more about the logic behind this ?

First one is an accident waiting to happen as Trenners has so eloquently put it ! Although, as he also points out probably a long term tenant !

If i were entering into either deal i would insist on full referencing first with a cast iron gaurantor on deal 1.

Also i would negotiate one years rent plus a bond up front payable on completion (financed from their equity) and have an agreement in place that the first year is rent paid for them - then at least you know you will have no financial worries on rent for a year- then re- assess at this time.

Or you could put them on half rent for 2 years (with the 1 in the bank already - maybe very attractive to them if cash flow is problem for them!!)(if mortage conditions limit you to 12 mths back to back 2 x 12 mths)

I would actually negotiate as much out of them as they could bear - if there is enough equity available to decorate the house and pay 3/4/5 years rent i would chase it as long as the vendor has a couple of grand they will prob be happy ! Needs a good fact find on both sits. Although on 1st sit partner will certainly want his half of equity unencumbered.

You know me !- Find their motivations and Get creative !!

Find what works for both parties and if you like it (figures!!) do it !

Simon

PS It should be rembered that you are in a fairly strong position when negotiating as most buyers will want vacant possession and this is clearly not what either of these vendor's motivations are !

Hi Odecar

I have twice bought and rented back to the previous owners...It sounds weird to others but it does make sense especially when a couple have split up and their is a child involved. The DSS are quite keen on this sceanario (or they were with me) and I found that payments were swifter than somebody entering a new address. One great thing I found is that the tenants (previous owners) told very few of their friends that the property had been sold and therefore treated it much more like their home than they may have done with a tempoary property. I have one such tenant who is paying me the maximum the DSS allows plus £200 top up a month extra because she says she never wants to move. I ve had her for 6 yaers....Keep Em Coming.

Bravesocks

[Homes To Let Ltd]

We have done this a few times now and would do it again any time,, think about it, if you buy a house with a tenant already in then there is no void period, no advertising, and no painting, fixing up or anything,,, we have no problems with renting back to old owners, you will see there are a few adverts about now offering this service, Last week in Medway, Kent, the paper had a full page front page advert saying it would buy and rent back your house so I suspect it is big business these days