3 Important Things to Consider When Buying a Property With Tenants
Sometimes when you buy a rental property, there may already be tenants living in it. This can be positive or negative depending on what type of renter they are and what type of manager the owner has been. Here are 3 important things to consider when buying a property with tenants.
1. Get to Know the Tenant
Before you buy a property with tenants get to know the tenants and their record. See which tenants are doing a great job with their units and which aren’t. Questions to ask are:
• Do they pay consistently and on time?
• Do they take good care of the property?
• Do they report problems with the property so they can be fixed?
• Do they follow the rules such as no smoking or pets?
• Will they be willing to allow you to inspect the property on a monthly or bi-monthly basis?
If the answers are not favorable, check when their lease is up and see if they can be moved out before you close or shortly after you close. Or see if you can negotiate an early termination.
2. Get to Know the Owner
Sometimes it is actually the owner or manager who is at fault in a poor rental relationship. Check into how the owner runs the property. Does he make repairs quickly and properly? Are there any complaints on file from tenants saying otherwise? When you get to know the tenants, see if their story matches that of the owner. If not, you may be able to use this to your advantage when buying the property. You can also use this to your advantage to keep good tenants.
3. Run the Numbers
When you or someone from your team inspects the rental property make sure to document all repairs that would need to take place. If repairs come up that you didn’t know about use them to negotiate a better deal. If some tenants turn out to be poor, figure in the costs of getting them out of the unit, repairing any damage, and finding new, excellent tenants.
If you focus on these 3 important things when buying a property with tenants, you will be well on your way to a successful venture.