As a Woodlands rental property investor, you have a good deal of options to choose from when you’re ready to buy your next property. If listings are hard to come by or you’d rather buy into a turn-key property, possessing a property with current tenants could be quite lucrative. At the same time, however, there are one or more things you need to ascertain in preparation for taking ownership of 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 on with your search, you should get acquainted with a few benefits of buying an occupied rental property.
To start with, owning a rental property with current tenants denotes the property as already making an income. This could be a big plus if you’re trying to make an immediate cash flow or add to your portfolio quickly. On top of everything else, 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 an exceptional time-saver for you as the new owner owing to the fact 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 some of the benefits of buying an occupied rental property, there are a few things you need to consider before ever making an offer.
The Lease Comes with the Property
Take note, that it’s critical to take in 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. Thus, 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 as well be responsible for those issues.
Property Condition May Vary
It’s additionally salient 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. Exactly why, it’s pivotal to have a professional home inspector conscientiously check the property before ever deciding on making an offer. In this way, you can make sure that you’re procuring property in good condition.
Potential for Unhappy Tenants
Furthermore, you need to be prepared for the likelihood of unhappy tenants. As a general rule, selling a rental property with existing tenants goes right, and there are many issues. But that is not always the case. Even if you inherit very nice tenants, they may not be excited about getting a new landlord. The sale of a property is a big deal to many tenants and may provoke 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 disappointing and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may turn up 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 possess a rental property with current tenants, it’s important to communicate effectively.
Property Management Plan
Conclusively, it’s necessary to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; putting into service expert local Woodlands property managers is pivotal to getting your rental property in shape and communicating effectively with existing tenants. A really good and skillful 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. Despite that, if you’re mindful of those challenges and have the right people on your team, you can certainly find a fantastic 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 Republic at 281-362-5001 today!
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