Acquiring an Emmett rental property with existing tenants may seem like an ideal situation. After all, the chance to skip renovating the rental home, advertising, and screening tenants sounds very helpful. However, obtaining a property that is already leased comes with some benefits but also some tests. To efficiently purchase a property with existing tenants, it’s important to first learn as much as you can about the process and what to avoid.
The instant cash flows and turnkey nature of buying a leased property may appear to be an excellent option for your next investment property. However, it’s important not to consider that just because a property is leased, it is in good condition or that the tenants are responsible and punctual with rent payments. Instead, do your due diligence to guarantee that leased property is a good investment.
One of the first things you should examine when considering a leased property is the current lease agreement. When you get a property occupied by tenants, you definitely inherit the lease agreement they signed with their old landlord. Because 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. On other occasions, the tenant has agreed to terminate their lease upon the property’s sale, but that is not a regular case. Normally, you need to know what prior agreements govern your new investment.
Besides examining the existing lease documents, it’s required to screen the current tenants carefully before purchasing the property. Treat the situation as if the tenants had applied for the first time, running thorough background and credit checks on them and verifying their payment history and references. Additionally, verify with the current owner or landlord that the tenant has paid a security deposit and that it is kept securely in a separate bank account.
Aside from screening your tenants, it would be best if you did a thorough evaluation of the property as well. To get a full sense of the property’s current condition, it is imperative to examine the house’s condition and yard in person. With tenants at this time residing in the property, you need to know how cautious they are about keeping the property clean and maintained. Also, make sure to ask the current owner about any current or past insurance claims, primarily if they are tenant-caused. Numerous insurance claims might make it harder for you to ensure the property after the sale.
If all of that is okay, you may have discovered an incredible, tenant-occupied rental property. But regardless of whether your new Emmett investment currently has tenants or not, you’ll need to make an effort to 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 new rental property may come with tenants already existing there, after the sale is finished, you are fully responsible for managing and maintaining the property from that point on.
Property management can be a very exhausting task, particularly if you are doing it yourself. Rather, why not give the day-to-day tasks over to professionals? For more info about the property management services in Emmett, contact us today or call us at 208-960-0660.
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.