As a San Diego rental property investor, you have lots of options to choose from when you want to buy your next property. If listings are insufficient or you’d rather buy into a turn-key property, getting a property with current tenants is probably quite lucrative. At the same time, however, there are some things you need to be informed of before buying 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 initiate your search, you should grasp well these few advantages of buying an occupied rental property.
Mainly, procuring a rental property with current tenants points out the property is already producing income. This is probably a big plus if you’re seeking immediate cash flow or adding to your portfolio quickly. Particularly, 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 huge time-saver for you as the new owner simply because you won’t need to spend time and money marketing the property and screening potential tenants.
Things to Consider Before Buying
Now that you are informed about some of the useful benefits of buying an occupied rental property, there are a few things you need to consider before you ever decide to make an offer.
The Lease Comes with the Property
Chiefly, it’s essential to realize 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. In like manner, you will be held to the lease terms in place, in addition to the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll indeed be responsible for those issues.
Property Condition May Vary
It’s likewise key 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. Hence, it’s necessary to have a professional home inspector view the property in preparation before making an offer. By doing so, you can guarantee that you’re paying for a property in good condition.
Potential for Unhappy Tenants
At length, you need to consider the likelihood of unhappy tenants. In the majority of cases, selling a rental property with existing tenants will be fine, with just a few issues. But that is not always the case. Even if you inherit the ideal tenants, they may not be eager about getting a new landlord. The sale of a property is a big deal to many tenants and may prompt 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 find these changes irritating and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may result from having an existing tenant is that they may not like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you get a rental property with current tenants, it’s significant to communicate effectively.
Property Management Plan
One final thing, it’s principal to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; utilizing expert local San Diego property managers is necessary to get your rental property in shape and communicate effectively with existing tenants. A qualified property manager can help smooth the way to profitable, long-term rental property ownership.
Having a rental property with current tenants comes with its own set of benefits and challenges. But, if you’re disposed to those challenges and have great people on your team, you can easily find an amazing 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 Realevate Specialists at 858-997-2100 or 951-461-0100 today!
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