Checklist for Buying Tenant Occupied Properties

[Sam Kahl]

Hi everyone,

I'm working on a blog for What To Ask For When Buying A Tenant Occupied Property and here is the list I have so far. Am I missing anything?

Ask to see a copy of the lease and look for the length of lease, current rent amount, tenant obligations like paying for utilities and adhering to house rules and look for Landlord obligations like things the landlord may currently being paying for (like trash and water)

Make sure to have an assignment of the lease and clear language on the security deposit WITH interest shall be transferred to the new owner at settlement.

Consider tenant quality - what’s their payment history looked like, obtain rent receipts or bank statements from the seller to review on-time payment history. Ask to see the sellers Schedule C to see that the income reported matches the payment history. Ask for the application and screening reports like the credit report, background check and application.

Check the property conditions - ask to see a copy of the lead certificate, rental license and rental inspection. Get a new home inspection done to identify any serious issues. Review the seller’s maintenance records to identify any existing issues or potential problems.

Do your financial analysis to factor in the current rent, estimated vacancy rate, maintenance costs, property taxes, and insurance to determine the property's projected cash flow. Does the income cover your expenses and generate a positive return on investment?

Thanks for your thoughts!