Procuring a Fort Worth rental property with existing tenants may sound like an ideal situation. After all, the possibility to skip renovating the rental home, advertising, and screening tenants is quite pleasing. But buying a property that is presently leased includes some benefits but also some headaches. To easily purchase a property with existing tenants, it’s imperative to initially learn as much as you can about the method and what to avoid.
The instant cash flows and turnkey nature of buying a leased property could appear to be a great option for your next investment property. However, it’s necessary 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. Preferably, do your due diligence to guarantee that leased property is a good investment.
One of the first things you must inspect when considering a leased property is the current lease agreement. Once you acquire a property occupied by tenants, you generally inherit the lease agreement they signed with their former landlord. Because 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. In specific cases, the tenant has chosen to terminate their lease upon the property’s sale, although this is definitely not something typical. As a rule, you need to know what prior agreements govern your new investment.
In addition to examining the existing lease documents, you have to screen the current tenants carefully before getting 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. Additionally, verify with the current owner or landlord that the tenant has paid a security deposit and that it is properly maintained in a separate bank account.
Together with screening your tenants, it’s advisable to do a thorough evaluation of the property as well. To get a full sense of the property’s current condition, you should observe the house’s condition and yard in person. With tenants already residing in the property, it’s important to know how reliable they are about keeping the property clean and maintained. What is more, remember to ask the current owner about any current or past insurance claims, especially if they are tenant-caused. Too many insurance claims might make it tougher for you to ensure the property after the sale.
If everything goes smoothly, you may have found the perfect, tenant-occupied rental property. But no matter if your new Fort Worth investment already has tenants or not, you’ll need to be prepared to get and keep the property in habitable condition, inspect 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 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 involved job, especially if you are doing it yourself. Instead, why not allocate the day-to-day tasks over to professionals? For more information about the property management services in Forth Worth, contact us today or call us at 817-930-1160.
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