Benefits of Buying an Occupied Rental Property
As you begin your actual search, you should learn of the advantages of buying an occupied rental property.
First of all, buying a rental property with current tenants denotes that the property is already bringing in income. This may be a big plus if you’re trying to find immediate cash flow or add to your portfolio quickly. In addition, 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 very good time-saver for you as the new owner since 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 when making an offer.
The Lease Comes with the Property
Mainly, it’s very important to ascertain 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. Particularly, you will be held to the lease terms in place, with the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll moreover be responsible for those issues.
Property Condition May Vary
It’s equally vital 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. Knowing this, it’s key to have a professional home inspector check over the property just before making an offer. Accordingly, you can make certain that you’re taking possession of a property in good condition.
Potential for Unhappy Tenants
Lastly, you need to take in the probability of unhappy tenants. In general, selling a rental property with existing tenants will do very well, and there are one or several issues. But that is not always the case. Even if you inherit the best 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 affect 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 possibly find these changes unlikeable and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may emerge 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 obtain a rental property with current tenants, it’s salient to communicate effectively.
Property Management Plan
In the end, it’s beneficial to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; closely working with expert local El Segundo property managers is primal to get your rental property in shape and communicate effectively with existing tenants. An efficient and capable property manager can help smooth the way to profitable, long-term rental property ownership.
Buying a rental property with current tenants comes with its own set of benefits and challenges. That being said, if you’re geared up for those challenges and have the right people on your team, you can pick a great 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 California Coast at 310-535-2150 today!