Buying a Maitland rental property with existing tenants may sound like an ideal situation. After all, the opportunity to skip renovating the rental home, advertising, and screening tenants sounds pretty good. However, buying a property that is already leased does have certain advantages but also some obstacles. To effectively purchase a property with existing tenants, it’s important to read everything about the procedure and what to avoid.
The instant cash flows and turnkey nature of buying a leased property may make you feel like a great option for your next investment property. But it’s necessary not to think that just because a property is leased, it is in good condition or that the tenants are responsible and punctual with rent payments. Alternatively, do your due diligence to ensure that the leased property is a good investment.
One of the first things you should know when considering a leased property is the current lease agreement. When you purchase a property occupied by tenants, you instantly inherit the lease agreement they signed with their old landlord. As the lease is a binding contract, you should be comfortable living by the terms of that lease until it ends or comes up for renewal. In some circumstances, the tenant has agreed to terminate their lease upon the property’s sale, but that is not a normal situation. In general, you need to know what prior agreements govern your new investment.
On top of examining the existing lease documents, it’s vital to screen the current tenants carefully before getting the property. Treat the situation as if the tenants were applying for the first time, running thorough background and credit checks on them and verifying their payment history and references. Plus, verify with the current owner or landlord that the tenant has paid a security deposit and that it is duly stored in a separate bank account.
In addition to screening your tenants, it’s necessary to perform a thorough evaluation of the property as well. To get a full sense of the property’s current condition, you must inspect the house’s condition and yard in person. With tenants already living in the property, it’s good to know how diligent they are about keeping the property clean and maintained. In addition, remember to ask the current owner about any current or past insurance claims, basically if they are tenant-caused. Multiple insurance claims might make it troublesome for you to ensure the property after the sale.
If everything goes well, you may have located a great, tenant-occupied rental property. But no matter if your new Maitland investment already has tenants or not, you’ll need to be prepared to get and keep the property in habitable condition, check if the electrical and plumbing systems are safe and working correctly and that the structures are sound. While your latest rental property may include tenants already residing there, the moment the sale is final, you are fully responsible for managing and maintaining the property from that point on.
Property management can be a very challenging assignment, particularly if you are doing it yourself. Preferably, why not transfer the day-to-day tasks over to professionals? For more information about the property management services in Maitland, contact us today or call us at 407-681-7802.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
