As an Orlando rental property investor, you have some options to consider when buying your next property. If listings are not many or you’d rather buy into a turn-key property, purchasing a property with current tenants could be quite lucrative. At the same time, however, there are a few things you need to take into consideration before procuring 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 on with your search, you should be encouraged to know of the benefits of buying an occupied rental property.
Principally, securing a rental property with current tenants shows the property is already producing income. This could be a big plus if you’re seeking immediate cash flow or adding to your portfolio quickly. Also, 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 indeed be a huge time-saver for you as the new owner arising from the fact 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 know of the benefits of buying an occupied rental property, there are a few things you need to consider in preparation for making an offer.
The Lease Comes with the Property
Primarily, it’s focal 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. Specifically, you will be held to the lease terms in place, coupled with the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll further be responsible for those issues.
Property Condition May Vary
It’s, indeed, essential 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. As such, it’s imperative to have a professional home inspector go over the property before making an offer. In this respect, you can make sure that you’re buying a property in good condition.
Potential for Unhappy Tenants
Additionally, you need to be prepared for possible unhappy tenants. Ordinarily, selling a rental property with existing tenants will do okay, and there are just a few issues. But that is not always the case. Even if you inherit excellent tenants, they may not be excited about getting a new landlord. The sale of a property is a big deal to many tenants and may produce 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 might find these changes scary and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may pop up with an existing tenant is that they wouldn’t want 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 key to communicate effectively.
Property Management Plan
At length, it’s pertinent to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; making use of expert local Orlando property managers is integral to getting your rental property in shape and communicating effectively with existing tenants. A great property manager can help smooth the way to profitable, long-term rental property ownership.
Purchasing a rental property with current tenants comes with its own set of benefits and challenges. Yet, if you’re capable of facing those challenges head-on and have the most qualified people on your team, you can easily single out a lovely 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 South Orlando at 407-982-2000 today!
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