As a Baton Rouge rental property investor, you have multiple options to decide upon when securing your next property. If listings are very few or you’d rather buy into a turn-key property, acquiring a property with current tenants could be quite lucrative. At the same time, however, there are some critical 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 set off on your search, you should know some known advantages of buying an occupied rental property.
Chiefly, buying a rental property with current tenants means the property is already bringing in income. This could most definitely be a big plus if you’re hunting 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 welcome time-saver for you as the new owner arising from the fact you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you clearly understand quite a few benefits of buying an occupied rental property, there are a few things you need to consider before ever making an offer.
The Lease Comes with the Property
First of all, it’s critical to understand 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. At the same time, 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, on top of that, be responsible for those issues.
Property Condition May Vary
It’s also imperative 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’ve not seen and are unaware of. That is why it’s great to have a professional home inspector completely inspect the property before ever making an offer. In this connection, you can be quite sure that you’re owning a property in good condition.
Potential for Unhappy Tenants
Also, be aware that you need to be ready for the possibility of unhappy tenants. Typically, selling a rental property with existing tenants can work out well, and there are very 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 set off 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 may perhaps find these changes unsettling and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may unfold with an existing tenant is that they wouldn’t be willing to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you have possession of a rental property with current tenants, it’s important to communicate effectively.
Property Management Plan
In the long run, it’s indeed critical to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; utilizing and closely working with expert local Baton Rouge property managers is great to get your rental property in shape and communicate effectively with existing tenants. An effective property manager can help smooth the way to profitable, long-term rental property ownership.
Securing a rental property with current tenants comes with its own set of benefits and challenges. Nonetheless, if you’re ready for those challenges and have expert people on your team, you can surely get a fine 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 Baton Rouge at 225-389-6860 today!
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