As an Ocala rental property investor, you have several choices to opt for when getting your next property. If listings are so very few or you’d rather buy into a turn-key property, having ownership of a property with current tenants is usually quite lucrative. At the same time, however, there are things you need to consider when 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 set about your search, you should know some of the known benefits of buying an occupied rental property.
Right off the bat, buying a rental property with current tenants indicates the property is already getting income. This is certainly a huge benefit if you’re on the lookout for immediate cash flow or adding to your portfolio quickly. Secondly, 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 significant time-saver for you as the new owner 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 apprehend several benefits of buying an occupied rental property, there are a few things you need to consider just before making an offer.
The Lease Comes with the Property
First of all, it’s crucial to grasp well 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. On top of everything else, you will be held to the lease terms in place, apart from the monthly rental amount, due date, late fees, etc. If the tenant fails to pay rent or damages the property, you’ll have to be responsible for those issues.
Property Condition May Vary
It’s especially beneficial 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. That’s why it’s principal to have a professional home inspector go throughout the property preliminary to make an offer. In this regard, you can make certain that you’re buying a property in good condition.
Potential for Unhappy Tenants
Also, take note, that you need to prepare for the probability of unhappy tenants. In most circumstances, selling a rental property with existing tenants works out, and there are very few issues. But that is not always the case. Even if you inherit great tenants, they may not be pleased with 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 would seem to find these changes unexciting and unpleasant.
Potential for Uncooperative Tenants
Another potential issue that may befall an existing tenant is that they don’t usually like to respond to requests for screening documents or set a time to inspect and perform maintenance on the property. When you buy a rental property with current tenants, it’s imperative to communicate effectively.
Property Management Plan
In the long run, it’s key to have a realistic plan for managing your rental property. Owning rental property comes with a lot of work and responsibility; hiring and working closely with expert local Ocala property managers is the principal key to getting your rental property in shape and communicating effectively with existing tenants. The right and expert 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. But on the other hand, if you’ve prepared yourself for those challenges and have reliable people on your team, you can successfully find a nice 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 Diversified at 352-854-2221 today!
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