As a Grand Rapids rental property investor, you have multiple options to select when purchasing your next property. If listings are not a lot or you’d rather buy into a turn-key property, securing a property with current tenants is possibly quite lucrative. At the same time, however, there are a handful of things you need to understand before getting 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 underway with your search, you should learn about the few benefits of buying an occupied rental property.
Primarily, buying a rental property with current tenants signifies the property is already happily generating income. This is certainly a big plus if you’re actually looking for immediate cash flow or adding to your portfolio quickly. Besides, 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 serious time-saver for you as the new owner on grounds that you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you grasp well a few benefits of buying an occupied rental property, there are a few things you need to consider just before making an offer.
The Lease Comes with the Property
Particularly, it’s key to take into account 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. Likewise, you will be held to the lease terms in place, plus 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 specifically 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 unaware of. For that reason, it’s very important to have a professional home inspector properly check the property before making an offer. In so doing, you can ensure that you’re taking on a property in good condition.
Potential for Unhappy Tenants
Most importantly, you need to ascertain and prepare for the possibility of having unhappy tenants. Normally, selling a rental property with existing tenants will be smooth, and there are just a few issues. But that is not always the case. Even if you inherit likable tenants, they may not be so happy about getting a new landlord. The sale of a property is a big deal to many tenants and may cause 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 understandably find these changes maddening and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may crop up 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 acquire a rental property with current tenants, it’s crucial to communicate effectively.
Property Management Plan
In the final analysis, it’s a really good idea to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; partnering with expert local Grand Rapids property managers is very important to get your rental property in shape and communicate effectively with existing tenants. An expert 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. Having said that, if you’re set up for those challenges and have the right people on your team, you can effectively find a favorable 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 Investment Solutions at 616-419-4578 today!
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