Buying a property: opting for an apartment with a tenant
Becoming the owner of an apartment with a tenant offers a number advantages. First and foremost, the opportunity to buy at a reduced price. It’s also a way of acquiring a property that already generates rental income.
The resulting discount
The acquisition of a residence with a tenant in place affords the purchaser the opportunity to pay less than they would at market price were the property sold unoccupied. Today, this “discount” is around 5% to 10%. Not an insignificant reduction given the prices in the Capital’s 5th, 6th, and 7th arrondisements.
This discount, agreed by the vendor, is provided because the purchaser does not have full enjoyment of the property on the day it is acquired. The new owner must often wait until the end of the lease to finally inhabit the property or to re-lease it if the present tenant terminates their contract. By way of a reminder, the maximum term of a lease is three years (if the seller is an individual) and up to six years where the outgoing landlord is an institutional investor (insurance company, mutual fund, etc.).
Good traceability of information
The principal sellers of occupied housing are insurance companies and mutual funds. Held by these rental “pros”, the properties on offer are often well located and of good quality (lots of Haussmannian properties or beautiful residences from the 60s and 70s). The communal areas are often in good condition and generally better maintained than co-ownerships managed by individuals. In the event of a “split sale”, the communal areas and shared fixtures and fittings (boiler, elevator, etc.) generally undergo general refurbishment at the vendor’s cost.
Another interesting point: the institutional leaseholder possesses precise historical information about the building. They are likely to provide details of building works carried out over the years, and full and reliable information on the current tenant.