As a Salt Lake City rental property investor, you have a number of selections to pick from when you want to procure your next property. If listings are quite hard to find or you’d rather buy into a turn-key property, purchasing a property with current tenants could be quite lucrative. At the same time, however, there are several things you need to know before purchasing 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 going on your search, you should know one or many advantages of buying an occupied rental property.
Primarily, acquiring a rental property with current tenants happily means the property is already creating income. This is seemingly a big plus if you’re looking for immediate cash flow or adding to your portfolio quickly. On top of 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 real 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 actually know several benefits of buying an occupied rental property, there are a few things you need to consider before deciding to make an offer.
The Lease Comes with the Property
Firstly, it’s necessary to apprehend 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. Moreover, you will be held to the lease terms in place, on top of the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll likewise be responsible for those issues.
Property Condition May Vary
It’s, on top of that, integral 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. Accordingly, it’s imperative to have a professional home inspector regarding the property just prior to making an offer. In this fashion, you can secure that you’re putting money into a property in good condition.
Potential for Unhappy Tenants
One last important matter, you need to take into consideration the possibility of unhappy tenants. In most situations, selling a rental property with existing tenants goes relatively well, and there are only very few issues. But that is not always the case. Even if you inherit terrific tenants, they may not be delighted about getting a new landlord. The sale of a property is a big deal to many tenants and may trigger 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 certainly find these changes bothersome and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may appear with an existing tenant is that they don’t wish to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you make a purchase of a rental property with current tenants, it’s really important to communicate effectively.
Property Management Plan
In the long run, it’s salient to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; utilizing expert local Salt Lake City property managers is imperative to get your rental property in shape and communicate effectively with existing tenants. An excellent property manager can help smooth the way to profitable, long-term rental property ownership.
Possessing a rental property with current tenants comes with its own set of benefits and challenges. Though, if you’re ready to face those challenges and have good people on your team, you can locate a wonderful 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 Wasatch at 801-889-1517 or 435-244-3394 today!
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