As a Provo rental property investor, you have various options to select when purchasing your next property. If listings are rare or you’d rather buy into a turn-key property, taking a property with current tenants is, in all likelihood, quite lucrative. At the same time, however, there are a small number of things you need to comprehend in preparation for buying 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 hit the ground in your search, you should take into consideration the few advantages of buying an occupied rental property.
Primarily, getting a rental property with current tenants denotes the property is already producing income. This is certainly a big plus if you’re in search of immediate cash flow or adding to your portfolio quickly. Besides 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 huge time-saver for you as the new owner in consideration 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 comprehend the various benefits of buying an occupied rental property, there are a few things you need to consider preceding to making an offer.
The Lease Comes with the Property
First and foremost, it’s imperative 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. Further, you will be held to the lease terms in place, over and above the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll therefore be responsible for those issues.
Property Condition May Vary
It’s, on top of everything else, substantial 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 consequence, it’s critical to have a professional home inspector go over the property before ever making an offer. In this manner, you can safeguard that you’re taking ownership of a property in good condition.
Potential for Unhappy Tenants
Lastly, you need to take into account the real possibility of unhappy tenants. Most of the time, selling a rental property with existing tenants goes right, and there are only a handful of issues. But that is not always the case. Even if you inherit the best tenants, they may not be pleased about getting a new landlord. The sale of a property is a big deal to many tenants and may instigate 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 most definitely find these changes disappointing and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come about with an existing tenant is that they don’t all like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you take a rental property with current tenants, it’s vital to communicate effectively.
Property Management Plan
Most of all, it’s key to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; applying expert local Provo property managers is critical to get your rental property in shape and communicate effectively with existing tenants. A suitable and excellent property manager can help smooth the way to profitable, long-term rental property ownership.
Investing in a rental property with current tenants comes with its own set of benefits and challenges. Although if you’re equipped for those challenges and have efficient people on your team, you can certainly find the perfect 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 Utah County at 801-224-0033 today!
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