As a Dover rental property investor, you have several options to take when purchasing your next property. If listings are limited or you’d rather buy into a turn-key property, buying a property with current tenants probably could be quite lucrative. At the same time, however, there are certain things you need to know in preparation for owning 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 start your search, you should understand the various benefits of buying an occupied rental property.
First of all, putting money into a rental property with current tenants suggests the property is already producing income. This is certainly a big plus if you’re looking out for immediate cash flow or adding to your portfolio quickly. Aside from 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 considerable 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 are aware of some of the benefits of buying an occupied rental property, there are a few things you need to consider previous to making an offer.
The Lease Comes with the Property
First thing, it’s important to consider 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. Over and above that, you will be held to the lease terms in place, in keeping with the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll, in addition, be responsible for those issues.
Property Condition May Vary
It’s, in particular, pertinent 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. Because of this, it’s salient to have a professional home inspector check the property before deciding to make an offer. In that regard, you can ascertain that you’re securing a property in good condition.
Potential for Unhappy Tenants
Additionally, you need to know about the odds of having unhappy tenants. Generally, selling a rental property with existing tenants can work out well, and there are not many issues. But that is not always the case. Even if you inherit near-perfect 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 generate 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 surely find these changes wearisome and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may materialize with an existing tenant is that they don’t usually like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you have ownership of a rental property with current tenants, it’s critical to communicate effectively.
Property Management Plan
When all is said and done, it’s really important 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 Dover property managers is crucial to getting your rental property in shape and communicating effectively with existing tenants. The ideal and excellent property manager can help smooth the way to profitable, long-term rental property ownership.
Taking a rental property with current tenants comes with its own set of benefits and challenges. Anyhow, if you’re ready and equipped to face those challenges and have great people on your team, you can find that ideal 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 Seacoast New Hampshire at 603-343-2202 today!
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