Anyone considered buying a repossessed property at auction with a AST who is late paying rent

[jenny19]

Hello Everyone

I'm new to this game and just wondered whether anyone has considered buying a property at auction that is repossessed where the tenant is behind on rent. If so does anyone have any tips on how to manage it. The property is quite a distance from my home so I would instantly appoint a letting agent. My view is that as I would only be entitled to the rent going forward all I have to do is instruct the lettings agent to set up new payment instructions for the months going forward.

Thanks in advance for your help.

[LLAW96]

I see no reason why you cannot claim the arrears outstanding from the grant of the tenancy as the same follows the reversionary interest in the lease. When you say you have a tenant in place under an AST are you sure, I have seen these before where properties have been sold at auction as AST's when in fact its a tenant holding over on a long lease i.e a full assured tenancy.

[Richlist]

My view is .............. all I have to do is instruct the lettings agent to set up new payment instructions for the months going forward.

If only it was as easy as that.

What makes you think that the tenant is going to pay YOU when he isn't paying the current landlord ?

[Grampa]

You need to see a copy of the tenancy agreement because as LAW says it may not be a AST and if if was a regulated tenancy that would may a big big differance to the price you would pay.

[jenny19]

Thank you for your replies. I have seen the tenancy agreements and they were originally signed as AST although they are holding over. Richlist - I guess that is the gamble that I would have to take. I have seen quite a few of these properties come up at auction and I've always been tempted as the return looks so good but it bothers me that I would be purchasing a property that already has a bad tenant and that I would then have the problem of evicting them. I have considered buying a property with no tenant and then letting it out but the properties that I have seen all need to be renovated which adds to the cost. Also many of the decent properties that offer the potential for a good return are no where near where I live which adds to the problem.

Many thanks for your help.

Jenny

[Richlist]

Something else that you might like to think about when choosing which property to buy is .........rental return vs capital appreciation.

Often, properties that offer the best yield (rental return) are at the cheaper end of the market, attract the worst tenants and offer the worst capital appreciation. It works the other way as well and those properties that are a little more expensive produce a lower yield but often show a greater capital appreciation. I usually try to buy somewhere in the middle as I have no interest in poor quality tenants, low yields & no capital gain. Remember.....just a small capital gain on your investment property will often far outweigh any increase in rent obtained from buying a cheaper property.

[jenny19]

Hi Richlist - I hear where you are coming from but my view is that in the current market it is very hard to predict where the capital gain will come from if at all. My boss has purchased several properties in Chelsea, London in recent years in the hope of capital gain and whilst Chelsea has recently seen impressive gains no one knows whether that would be likely to continue and if so for how long and in the meantime I don't see how the yield could possibly cover his costs. Sadly Chelsea is way out of my league!!

[Richlist]

Whilst I'm in general agreement with you I don't think price rises (or falls) are the same everywhere. Whilst it may be difficult to predict which areas might show rises its a lot easier to identify areas that will NOT.

I don't know Wales particularly well but the impression I get is that its not famous for price increases. Given a choice between Chelsea or Wales.....I'd go for Chelsea personally.

Good luck

[Grampa]

Given the choice between Wales and Afghanistan I'd go for Afghanistan.

[Melboy]

Given the choice between Wales and Afghanistan I'd go for Afghanistan.

But not Camp Bastion eh! Grampa

I'm off to Wales today. The nice area though.

[Grampa]

Baa

Dont forget your wellys

[LLAW96]

I am based in the Midlands and I spend a lot of time in Wales, I find the people friendly and the views fantastic. It must be harsh in winter in some places but a bit of cold never bothered me.

[Grampa]

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[Mortitia]

Depends on which part of Wales Jenny?

I'll take a guess this property is in the Valleys of South Wales? High unemployment, high teen pregnancy rates, high DHS tenancies, high drug use and addiction amongst under 40's.

Cheap properties but a myriad of problem people - and I speak as someone whose family originates in that area.

Mortitia

[PatseChi]

question: why would the 'late paying tenant' pay you going forward?

just purchase the property if you want it, evict the tenant and start anew.

and avoid leasing agents - they're all scammers