Purchasing a West Richland rental property with existing tenants may appear to be an ideal situation. However, the potential to skip renovating the rental home, advertising, and screening tenants seems beneficial. Nonetheless, purchasing a property that is currently leased accompanies a few advantages but also some difficulties. To effectively purchase a property with existing tenants, it’s essential to initially understand as much as you can about the procedure and what to avoid.
The instant cash flows and turnkey nature of buying a leased property may make it seem like a good choice for your next investment property. However, it’s significant not to expect 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 the leased property is a good investment.
One of the primary things you should inspect when considering a leased property is the current lease agreement. When you purchase a property occupied by tenants, you certainly inherit the lease agreement they signed with their previous landlord. Since 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. In other instances, the tenant has consented to terminate their lease upon the property’s sale, but that is not a typical circumstance. Usually, you need to know what prior agreements govern your new investment.
Aside from examining the existing lease documents, it’s necessary 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 stored correctly in a separate bank account.
Together with screening your tenants, it’s imperative to do a thorough evaluation of the property as well. To get a full sense of the property’s current condition, you should see the house’s condition and yard in person. With tenants currently residing in the property, it’s important to see 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, particularly if they are tenant-caused. Too many insurance claims might make it harder for you to ensure the property after the sale.
If everything checks out, you may have discovered an incredible, tenant-occupied rental property. But no matter if your new West Richland investment already has tenants or not, you’ll need to make sure that the property is in habitable condition by examining if the electrical and plumbing systems are safe and working correctly and that the structures are sound. Even though your current rental property may come with tenants already residing there, the moment the sale is complete, you are fully responsible for managing and maintaining the property from that point on.
Property management can be a very complicated job, particularly if you are doing it yourself. Rather, why not give the day-to-day tasks over to professionals? For more information about the property management services in West Richland, contact us today or call us at 509-572-5440.
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.