As a Vernal rental property investor, you have a lot of different options to select from when procuring your next property. If listings are quite a few or you’d rather buy into a turn-key property, buying a property with current tenants could certainly be quite lucrative. At the same time, however, there are a few things you need to perceive just before taking possession of a tenant-occupied rental property. Read on to learn how to buy a single-family rental property with current tenants.
Benefits of Buying an Occupied Rental Property
As you kick off your search, you should take into account one or more benefits of buying an occupied rental property.
First of all, purchasing a rental property with current tenants means the property is already receiving income. This is quite possibly a big plus if you’re going after immediate cash flow or adding to your portfolio quickly. Aside from that, 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 a vast time-saver for you as the new owner on the basis that you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you perceive the different benefits of buying an occupied rental property, there are a few things you need to consider before making an offer.
The Lease Comes with the Property
It’s critical to be aware 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. Likewise, you will be held to the lease terms in place, along with the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll certainly also be responsible for those issues.
Property Condition May Vary
It’s, over and above that, beneficial 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. In this regard, it’s relevant to have a professional home inspector go and thoroughly check the property when making an offer. Consequently, you can see to it that you’re buying a property in good condition.
Potential for Unhappy Tenants
On a final note, you need to distinguish the high possibility of unhappy tenants. In many situations, selling a rental property with existing tenants goes well, and there are just a few issues. But that is not always the case. Even if you inherit acceptable tenants, they may not be happy about getting a new landlord. The sale of a property is a big deal to many tenants and may create 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 possibly might find these changes annoying and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may transpire with an existing tenant is that they don’t like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you buy a rental property with current tenants, it’s essential to communicate effectively.
Property Management Plan
By way of conclusion, it’s very important to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; employing expert local Vernal property managers is relevant to get your rental property in shape and communicate effectively with existing tenants. An efficient property manager can help smooth the way to profitable, long-term rental property ownership.
Procuring a rental property with current tenants comes with its own set of benefits and challenges. But, if you’re primed for those challenges and have efficient people on your team, you can certainly find an effective 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 Uintah at 435-214-4686 today!
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