Benefits of Buying an Occupied Rental Property
As you begin your search, you should begin by understanding the benefits of buying an occupied rental property.
Purchasing a rental property with current tenants means the property is already yielding income. This could be a big plus if you’re attempting to find immediate cash flow or adding to your portfolio quickly. Likewise, since the property is already generating rental income, it will likely be easier to get approved for financing by traditional lenders.
Another benefit is that an occupied rental property means that there is already a renter in place who is familiar with the property. This can be an outstanding time-saver for you as the new owner because you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you know even a few of the benefits of buying an occupied rental property, there are a few things you need to consider before deciding on making an offer.
The Lease Comes with the Property
The first thing to take note, it’s very important that you’ll take on the current tenant’s lease when you purchase the property. You’ll be responsible for any repairs or maintenance issues during their tenancy. Therefore, you will be held to the lease terms in place, including the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll furthermore be responsible for those issues.
Property Condition May Vary
It’s also really crucial to take a very careful look at the property’s condition. Even if the tenant has been taking good care of the rental unit, there could be underlying issues you’re unaware of. This is the reason it’s pertinent to have a professional home inspector carefully check the property preparation before making an offer. That way, you can always make sure that you’re possessing a property in good condition.
Potential for Unhappy Tenants
One last thing to consider, you need to be ready also for unhappy tenants. Normally, selling a rental property with existing tenants will be fine, and there are not very many issues. But that is not always the case. Even if you inherit good tenants, they may not be enthusiastic about getting a new landlord. The sale of a property is a big deal to many tenants and may induce feelings of betrayal or discontent – especially if they’ve lived there for a long time. If their previous landlord did not visit the property often or raise the rent, they perhaps might find these changes bothersome and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come about with an existing tenant is that they won’t be open to responding to requests for screening documents or setting a time to inspect and perform maintenance on the property. When you obtain a rental property with current tenants, it’s substantial to communicate effectively.
Property Management Plan
More than anything, it’s vital to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; cooperating and partnering with expert local Shoreline property managers is pertinent to get your rental property in shape and communicate effectively with existing tenants. A very efficient property manager can help smooth the way to profitable, long-term rental property ownership.
Getting on a rental property with current tenants comes with its own set of benefits and challenges. Though, if you’ve prepared and equipped for those challenges and have the best people on your team, you can easily find a good rental property that will provide you with a steady income for years. For more information or to chat with a local rental market expert, contact Real Property Management Eclipse at 425-209-0252 today!