Existing Tenants or No Tenants

[James Robert Alexander]

I've been pre-approved to purchase my first multi-family home and house hack it but which would you say is best. Purchasing a property with existing tenants or purchasing one that doesn't have any tenants and I have to find them?

[Edward Dean]

It depends. With tenants in place you theoretically get instance revenue on day one. But, you didn't vet these tenants and depending on how long they have been there/how frequently the prior owner raised rents, then the rent they are paying may be under market value. You can mitigate some of this by seeing if the current owner has their applications, credit checks, background checks, etc., still on file, and if they can show bank statements that show rent is being paid, etc. but you still take some risk. 

With a vacant property, you have to go through the trouble of filling the vacancy but depending on the area and demand that may not be hard. And, you get to pursue current market rates. If you are looking to value add by renovating then vacancy can also be a plus because it is easier to get in and do the work without a tenant in there. 

Tenants in place can be a good thing but, depending on your goals, you'll likely find there are more advantages to starting fresh without tenants in place.

Best of luck!