buying for specific tenants

[Pjwhitfield]

hi,

Does anyone know of individuals or companies that will purchase investment property specifically for a tenant?

We are a professional couple, 1 young child (and a cat). We have always rented as we' do not have the necessary funds to purchase the level of property we are used to from renting.

In the past we've moved house regularly sometimes because we've simply fancied it other times it's been down to circumstances outside of our control. Now however we have a 6 year old son who is settled in his school and now we'd like to settle down.

It's not however so easy to find executive property which is available for such long periods, most are on short term while the bulk of the investment properties are Quayside apartments and suchlike.

What we would like to do is join up with an investor, find a property that suits both our needs ie area, quality etc for ourselves and price, ROI, future value etc for the investor. Agree a rent and the investor purchases the property for us to move in.

We'd be expecting to stay for at least 10 years until our son has left school and are in a position to pay upto £1500 p/m.

Does such a thing exist? If so, does anyone know how we go about it?

 

[Nicholas Wallwork]

Hi and welcome to the forum!

A very unusual question and not one I've come across before I have to say...

It could be a service agents could offer in the future but I'm personally not aware of anyone right now.

I'd suggest you try some of the following:
- advertise your offering on Gumtree, wanted adverts on Spareroom.co.uk and Upad (and other good online rental sites) in your chosen area as that will get seen by landlords.
- contact rental houses that you like and offer a longer term contract. Some landlords won't want to but some will probably jump at it as we all want to have minimum voids.
- in your offering include inflationary (or other) forms of rent review every say 2 years. This will be a major concern of any landlord wanting to ensure they get the market rent for their property.
- try contacting sellers! Not just landlords. Some sellers might be distressed landlords or home owners and the best thing could be for them to rent long term to you rather than selling... It's a possibility so worth considering and putting some rental offers out to properties you like. The vendor can only say no.

Many forms of property investment involve finding the right seller and NOT finding the property... It's the same here... You might have to take a few knock backs but eventually you should find a good long term landlord partner.

If your circumstances might change in a few years enabling you to buy you might want to try and negotiate a purchase "option" into the deal. This will set a sale price for the property so if in the future you decide you'd like to buy it then you can.

A solid tenant is every landlords dream so look hard enough and you might find someone. Good luck!

What area are you looking by the way?

 

[Pjwhitfield]

Hi Nicholas,

Thanks for getting back to me.

I'm surprised to hear that this isn't something that happens routinely, I would have thought that a landlord having guaranteed long term tenants before making a purchase was an investors dream?

The trouble with contacting the seller route is that they often change their mind part way into the tenancy, the property we're in now was originally up for sale then the vendor decided to take it off the market and rent it out, at the time he was keen on a long term but now he's seen other neighbouring properties sell and wants to put it back on the market.

We're looking for somewhere in Northumberland, ideally a small town called Cramlington, there's a wealth of properties for sale. We don't have a preference over new or pre-owned as long as it's something we would have bought ourselves if we could have.

 

[Nicholas Wallwork]

I would have thought that a landlord having guaranteed long term tenants before making a purchase was an investors dream?

I think you're right but there is no service I know of putting the two together so Landlords don't know where to find people like yourself!
SO - you need to market yourself to them... (i.e. methods I mentioned above). If you do that I think you'll get a response... the only limiting factor might be finding a landlord in your chosen areas. If it's a small town you might have to do more localised marketing (like the local Freeads, or newspaper) to hit your target audience (local landlords).

If I were a landlord in your town I'd be interested for sure so you just need to find them and tell them.

If you find one who agrees it doesn't matter if they change their mind after they have signed a 10 year lease... the initial negotiation is key to getting the least length you want. Remember to take the correct legal advice as this will be more of a commercial lease as an AST (Assured Shorthold Tenancy) is only allowed for a maximum for 12 months.

Remember to take action if you want to achieve your goal... good luck!

 

[Michelle Barringer]

My question to you - is that if your rent is going to be offering the landlord a reasonable income - then why would you not buy the property yourself as your rent would need to cover the mortgage payment to make it worthwhile for them? then you will benefit form the future value yourself. I would also suggest that many landlords would not like this as it reduced flexibility and there ability to adjust rent according to market rates and if there circumstances change they can't sell.

 

[Pjwhitfield]

My question to you - is that if your rent is going to be offering the landlord a reasonable income - then why would you not buy the property yourself as your rent would need to cover the mortgage payment to make it worthwhile for them? then you will benefit form the future value yourself. I would also suggest that many landlords would not like this as it reduced flexibility and there ability to adjust rent according to market rates and if there circumstances change they can't sell.

As I said in my opening post though, we're not in a good enough financial position to purchase them level of property we're used to.

I take on board what you say about the reduced flexibility but they are things that can easily be worked round. I'm not saying we sign a 10year lease with a set rent for the time. I'd happily agree to 1 or 2 year contracts at a time as long as we wer confident the property would be available long term.

It's all about the risk level, a property investor is generally in if for the long term not looking to just keep the mortgage payments going until the property can sell or to move back into their family home at some stage. That's what we need, just a stable position with a high level of confidence that we're there for many years.

 

[KGeeson]

Sounds like an interesting idea and I can see the appeal for certain landlords (especially those that are 'local' and prefer to stick to buying in their own area). There are lots of people who are either approaching retirement or are just retired, and are not experienced landlords but like the idea of a rental property locally (my parents are a perfect example of this). I would be tempted to create a flyer asking if anyone has been considering buying a rental property to provide an income through their retirement, and then to say about yourselves and the long term commitment you are seeking. This would definitely appeal to a fledgling investor because of the long term security. I would then put the leaflets through doors of certain estates in your local area where you think people of this age group (or those with a certain level of income - I'm talking nice, 3-4 bedroom housing estates etc) might live. And perhaps adverts in the local shop window etc too. Good luck!