Terry Lucking owner of leading letting agencies in Cambridge looks what to think about when it comes to the time to sell a buy to let investment property.
Who are you selling to? Terry recommends you are clear about who your target market is.
INVESTORS: If you have an ongoing tenancy and the property has been well maintained plus looks attractive and if priced competitively it may be of interest to other investors. They can buy with a current tenant and not lose any rental income. The downside is that investors are rarely motivated by emotion and more by a deal that can be struck which provides them with a strong income from their capital employed. An upside is that if the sale fails to complete you will still have rental income.
OWNER OCCUPIER: Selling to an owner occupier has its own challenges. You will need to gain vacant possession before completion of the sale. This should be straight forward but it is not certain that the tenants will vacate on the date of the Section 21 Notice. Owner occupier buyers are often put off if a tenancy is ongoing during their viewings so maybe best to end the tenancy and sell an unoccupied property. If the tenants fail to vacate you may have a lengthy court process to deal with. In my experience when a tenant receives the Section 21 Notice they normally start looking immediately and often ask for early release. Losing rental income during a sale to owner occupiers is more probable than not.
Discuss your plans with your tenants
Terry suggests you talk to your tenants as soon as you’ve decided what you are going to do. If you try to conceal your decision to sell and hope they wont find out until the last minute don’t be surprised if they aren’t helpful in relation to visits for valuation, survey or buyer viewings. Ask your tenants if they are interested in buying the property; many are.
Consider rewarding your tenants even if its just a few bottles of wine for helping with the sale, keeping the property yard and garden tidy. Your tenants are also a great source of information about the neighbourhood for any potential buyers.
Approach a local letting agency to see if they have investors who are looking to start or expand their portfolio. The letting agency can also circulate the property to all their current landlords for small fee.
Just as with any other investment the exit is an important time and needs careful planning to ensure you achieve your goals.
One final piece of advice from Terry is before you sell get qualified advice over how best to avoid paying unnecessary amounts of tax.
Terry Lucking is the owner and director of Belvoir Cambridge. Terry and his team are willing to help investors and landlords offering free pre sale visit and assessments.
Belvoir Cambridge are accredited and regulated agents. Members of ARLA, Safe agent, Safeagent and the Property Ombudsman. It is a requirement for a member of ARLA and Safe Agent to have Client Money Protection and have their accounts independently audited annually.
For more information or to ask Terry a question send an email to firstname.lastname@example.org or call 01223 352225