As an Alexandria rental property investor, you have a handful of options to pick out from when acquiring your next property. If listings are few or you’d rather buy into a turn-key property, purchasing a property with current tenants is most probably quite lucrative. At the same time, however, there are some things you need to be aware of preliminary to obtaining 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 started on your search, you should know well a few of the benefits of buying an occupied rental property.
First off, having ownership of a rental property with current tenants happily means the property is already producing income. This is most probably a big plus if you want immediate cash flow or to add to your portfolio quickly. Also, 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 great time-saver for you as the new owner considering you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you understand a lot of the benefits of buying an occupied rental property, there are a few things you need to consider in preparation for making an offer.
The Lease Comes with the Property
Before all else, it’s salient to take into consideration 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. Furthermore, you will be held to the lease terms in place, together with the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll additionally be responsible for those issues.
Property Condition May Vary
It’s particularly 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. In light of this, it’s key to have a professional home inspector walk throughout, checking the property before making an offer. So, you can always make sure that you’re getting a property in good condition.
Potential for Unhappy Tenants
Aside from all of the above, you need to be prepared for the potential of having unhappy tenants. Most of the time, selling a rental property with existing tenants will be doing well, and there are very few issues. But that is not always the case. Even if you inherit the ideal tenants, they may not be delighted with getting a new landlord. The sale of a property is a big deal to many tenants and may be the cause of 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 can find these changes infuriating and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come with an existing tenant is that they won’t probably 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 relevant to communicate effectively.
Property Management Plan
Conclusively, it’s substantial to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; working closely with expert, local Alexandria property managers is key to getting your rental property in shape and communicating effectively with existing tenants. The best property manager can help smooth the way to profitable, long-term rental property ownership.
Paying for a rental property with current tenants comes with its own set of benefits and challenges. On the other hand, if you’re qualified and equipped for those challenges and have the ideal people on your team, you can find an excellent 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 Optimum at 320-289-4649 today!
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