Procuring a Hidden Springs rental property with existing tenants may appear to be an ideal situation. Besides that, the ability to skip renovating the rental home, advertising, and screening tenants is quite interesting. Nonetheless, obtaining a property that is already leased includes a few benefits but also a couple of difficulties. To efficiently purchase a property with existing tenants, you first need to understand everything you can about the process and what to avoid.
The instant cash flows and turnkey nature of buying a leased property may seem like the ideal solution for your next investment property. Yet, since the property is leased, it is important not to expect that it is in good condition or that the tenants are responsible and punctual with rent payments. Alternatively, do your due diligence to guarantee that leased property is a good investment.
One of the main things you need to see when considering a leased property is the current lease agreement. Once you purchase a property occupied by tenants, you automatically inherit the lease agreement they signed with their last landlord. Since the lease is a binding contract, you will need to be comfortable living by the terms of that lease until it ends or comes up for renewal. Sometimes, the tenant has agreed to terminate their lease upon the property’s sale, but that is not a typical situation. For the most part, you need to know what prior agreements govern your new investment.
Aside from examining the existing lease documents, it’s important to screen the current tenants carefully before acquiring the property. Treat the situation as if the tenants were applying for the first time, running thorough background and credit checks on them and verifying their payment history and references. Furthermore, verify with the current owner or landlord that the tenant has paid a security deposit and that it is properly placed in a separate bank account.
In addition to screening your tenants, it’s beneficial to do a thorough evaluation of the property as well. To get a full sense of the property’s current condition, it is imperative to check the house’s condition and yard in person. With tenants already staying in the property, it’s essential to know how accountable they are about keeping the property clean and maintained. Additionally, bear in mind to ask the current owner about any current or past insurance claims, primarily if they are tenant-caused. Too many insurance claims might make it hard for you to ensure the property after the sale.
If everything checks out, you may have spotted an extraordinary, tenant-occupied rental property. But regardless of whether your new Hidden Springs investment already has tenants or not, you’ll need to be ready to get and keep the property in habitable condition, vertify that 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 living 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 complex task, mostly if you are doing it yourself. Ideally, why not allocate the day-to-day tasks over to professionals? To get more data about the property management services in Hidden Springs, contact us today or call us at 208-494-1800.
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