Existing tenants whilst purchasing

Hi all,

I've read on a few threads around tenants from hell in low socioeconomic areas (with higher cash flow). Can anyone draw on experience and let me know their thoughts on properties for sale with existing tenants for the next 6-10 months that "have been there for 5-10 years and want to be there for the next 5-10 years!" In these low socioeconomic locations? Obviously these selling properties are for solely investors.

My thought is looking at the rental history of these tenants to see if there have been any issues, late payments etc. but wary of these horror stories as well.

Any experiences with purchasing something like the above and things to note?

 

I think it's good to have someone paying rent from day 1. If you do an inspection, prior to buying, wouldn't that give you an idea of what kind of tenants they are? Maybe the estate agent could show you a record of any issues. Worth a shot. I prefer tenants who want to be there long term because they treat it like their own home, rather than a place they'll trash and move on

 

As Jasper said, if you buying for positive cashflow, the less time vacant the better, so a tenant wanting to stay on long term is a good thing, if that is your strategy. Make sure you pick up a copy of a lease to confirm the time left on the tenancy.

As to minimising the risk of a horrid tenant, you could always ring and speak to the current rental agent and ask them their opinion as to a change of tenant when the lease it up.

In the end, the best thing is to inspect the state of the property in person and meet the tenants – you will get a very good idea of the state of the place and the people who live there. If I came across a place that looked like it had been neglected or damaged by the current tenants with months on the lease left, I would certainly think twice. There's only so much a sales agent can cover for.

 

If you can land a tenanted property with tenants that have been there for 5-10 years already then you're in luck! That's awesome. The longevity of the lease likely means their decent - and it's much better then finding a tenant from scratch.

Cheers

Jamie

 

As long as the tenant checks out and is paying close to market value, then I think its great as it avoids the hit & miss of finding a great long term tenant.

I have a tenant who was there when I purchased and its been a great 10 year relationship to date!

 

Speak with he current property manager as they will know the tenant inside and out more than likely. If they pay rent on time and keep the property in a fair and reasonable condition then they sound like ideal tenants. It can go the other way but thats why you need to chat with the PM.

 

Ask for a ledger as part of the DD

 

Congratulations in possibly securing a property with tenants in place. What you want to do with it/them later is very much up to your financial situation. Just a couple of ideas to share:

• Long term tenants may not want rent increase. So you may not need to invest in "improvements'
• My personal experience with Owners meeting Tenants: not really advisable as it can be confrontational and they can put you on the spot by asking for repairs. Would suggest to meet/speak with PM first, spend a few months watching and decide later if you want to meet them. They might be nice people, but might not too....