As an Eastpointe rental property investor, you have different options to pick from when procuring your next property. If listings are uncommon or you’d rather buy into a turn-key property, acquiring a property with current tenants is possibly quite lucrative. At the same time, however, there are some important things you need to understand before securing 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 moving with your search, you should understand a few of the benefits of buying an occupied rental property.
Most importantly, investing in a rental property with current tenants implies the property is already making income. This is a big plus if you’re going in search of immediate cash flow or adding to your portfolio quickly. In particular, 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 bigger time-saver for you as the new owner because then 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 some 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 thing, it’s vital to know 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. Also, you will be held to the lease terms in place, besides the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll equally be responsible for those issues.
Property Condition May Vary
It’s further important 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. Thus, it’s essential to have a professional home inspector check the property before making an offer. That way, you can guarantee that you’re getting a property in good condition.
Potential for Unhappy Tenants
One last matter, you need to grasp well the perspective of unhappy tenants. In many cases, selling a rental property with existing tenants will be alright, and there are just a few issues. But that is not always the case. Even if you inherit really good 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 lead 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 perhaps might find these changes discouraging and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may occur 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 pivotal to communicate effectively.
Property Management Plan
Another important thing is it’s crucial to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; making use of expert local Eastpointe property managers is essential to get your rental property in shape and communicate effectively with existing tenants. The right property manager can help smooth the way to profitable, long-term rental property ownership.
Obtaining a rental property with current tenants comes with its own set of benefits and challenges. But, if you’re ready for those challenges and have the ideal people on your team, you can locate an incredible 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 Metro Detroit at 248-808-6550 today!
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