As a West Covina rental property investor, you have a few options to decide on when acquiring your next property. If listings are really few or you’d rather buy into a turn-key property, buying a property with current tenants is most likely quite lucrative. At the same time, however, there are some things you need to realize before shelling out for 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 get rolling on your search, you should know some great benefits of buying an occupied rental property.
Taking a rental property with current tenants simply means the property already is getting income. This is most likely a big plus if you’re directly after immediate cash flow or adding to your portfolio quickly. Indeed, 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 huge time-saver for you as the new owner by reason 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 know of the 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
First off, it’s relevant to understand 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. On top of that, you will be held to the lease terms in place, added to the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll thus be responsible for those issues.
Property Condition May Vary
It’s furthermore very critical 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. As a result, it’s crucial to have a professional home inspector inspect the property preparatory to making an offer. By doing so, you can nail down that you’re purchasing a property in good condition.
Potential for Unhappy Tenants
On that note, you need to know also of the real possibility of unhappy tenants. In nearly all cases, selling a rental property with existing tenants goes just really well, and there are quite a few issues. But that is not always the case. Even if you inherit prime tenants, they may not be ecstatic about getting a new landlord. The sale of a property is a big deal to many tenants and may contribute to 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 probably might find these changes disheartening and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come up 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 acquire a rental property with current tenants, it’s necessary to communicate effectively.
Property Management Plan
What it all comes down to, it’s focal to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; hiring expert local West Covina property managers is crucial to get your rental property in shape and communicate effectively with existing tenants. A fitting and excellent property manager can help smooth the way to profitable, long-term rental property ownership.
Acquiring a rental property with current tenants comes with its own set of benefits and challenges. But certainly, if you’re all set and ready for those challenges and have expert people on your team, you can successfully find a fine and profitable 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 Fairmate at 626-691-9749 today!
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