As a Waukesha rental property investor, you have plenty of options to take on if the time comes for you to purchase your next property. If listings are few and far between or you’d rather buy into a turn-key property, buying out a property with current tenants could indeed be quite lucrative. At the same time, however, there are just a few things you need to understand well in preparation for 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 set off on your search, you should understand well some of the benefits of buying an occupied rental property.
Firstly, purchasing a rental property with current tenants happily signifies the property is already making income. This would be a big plus if you’re trying to figure out immediate cash flow or adding to your portfolio quickly. Moreover, 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 really big 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 a few of the benefits of buying an occupied rental property, there are a few things you need to consider before deciding on making an offer.
The Lease Comes with the Property
It’s substantial 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. Indeed, you will be held to the lease terms in place, inclusive of the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll, on top of everything else, be responsible for those issues.
Property Condition May Vary
It’s also really critical 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 surely unaware of. This is why it’s imperative to have a professional home inspector thoroughly go over the property before making an offer. In this sense, you can make sure that you’re obtaining a property in good condition.
Potential for Unhappy Tenants
Also, take note that you need to be ready for unhappy tenants. Mostly, selling a rental property with existing tenants will be okay, and there are only a few issues. But that is not always the case. Even if you inherit fine and likable tenants, they may not be elated about getting a new landlord. The sale of a property is a big deal to many tenants and may bring on 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 will find these changes maddening and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may come into being with an existing tenant is that they won’t like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you acquire a rental property with current tenants, it’s primal to communicate effectively.
Property Management Plan
At the end of the day, it’s significant to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; partnering closely with expert local Waukesha property managers is very critical to getting your rental property in shape and communicating effectively with existing tenants. An efficient property manager can help smooth the way to profitable, long-term rental property ownership.
Obtaining a rental property with current tenants comes with its own set of benefits and challenges. Even so, if you’re on the alert and make yourself capable of dealing with those challenges and have the appropriate people on your team, you can pick out 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 Greater Milwaukee at 262-309-6961 today!
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