Buying a tenanted property

RT - keep tenants

When it comes to expanding your property portfolio there are certain things that you, as an investor, look for in a potential investment property. These include location, rental returns and the property type itself; but what if the property comes with tenants?

In many ways this can be an advantage, however it pays to do your research beforehand to make sure the appeal of a tenanted property doesn’t overshadow the property itself.

Immediate rental income on settlement is very appealing, as is the lack of stress associated with the process of finding a suitable tenant, not to mention costs involved. But when it comes to tenants, you are unlikely to have a comprehensive picture unless you speak with the current property manager and discuss the current situation of the tenants and lease.

It is important to have a thorough look over the current lease in place. If a fixed term lease is in place this will continue to carry on as per usual – new owners will not impact this at all. Discuss with the property manager if there are any agreements that current landlords may have in place with tenants, such as updating appliances, or landscaping costs, as this will fall to the new owner’s responsibility. If a periodic lease is in place, tenants must be given notice to leave involving a set number of days, or new fixed term lease agreed upon.

If the current tenants have been in the property long-term, it may be worthwhile checking to see if the current rent rate is on par with the current market. Increasing rent may result in current tenants moving on, but it’s likely you will find new tenants willing to pay in line with the market.

Of course, purchasing a tenanted property does not automatically require you to keep the current property manager. Keep in mind that their history and knowledge of the property itself is extremely valuable but also be confident that you are getting the best property management service available.

Posted in Uncategorized on 3 May, 2018 | Comments Off on Buying a tenanted property