As a Capitol Hill rental property investor, you have quite a few options to decide upon once you’re buying your next property. If listings are lacking or you’d rather buy into a turn-key property, bagging a property with current tenants may be quite lucrative. At the same time, however, there are particular things you need to grasp well before trying to own 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 commence your search, you should ascertain some advantages of buying an occupied rental property.
Firstly, purchasing a rental property with current tenants conveys the property is already earning income. This may be a big plus if you’re desirous of 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 a definite 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 understand several 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
Most importantly, it’s really important to comprehend 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. In particular, you will be held to the lease terms in place, not to mention the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll, in like manner, be responsible for those issues.
Property Condition May Vary
It’s similarly significant 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. Considering this, it’s focal to have a professional home inspector find the property after previously making an offer. Similarly, you can be certain that you’re spending on a property in good condition.
Potential for Unhappy Tenants
Another important matter, is you need to learn about the possibility of unhappy tenants. Usually, selling a rental property with existing tenants will come out right, and there may be one or a few issues. But that is not always the case. Even if you inherit nice tenants, they may not be overjoyed about getting a new landlord. The sale of a property is a big deal to many tenants and may engender 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 could find these changes such a drag and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come about with an existing tenant is that they don’t want to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you secure a rental property with current tenants, it’s principal to communicate effectively.
Property Management Plan
Ultimately, it’s really important to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; partnering with expert local Capitol Hill property managers is focal to getting your rental property in shape and communicating effectively with existing tenants. An excellent property manager can help smooth the way to profitable, long-term rental property ownership.
Having ownership of a rental property with current tenants comes with its own set of benefits and challenges. With that said, if you’re organized for those challenges and have the ideal people on your team, you can choose more than a decent 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 DC Metro at 202-269-0303 today!
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