Buying a property with tenants already there

[Michael Sheridan]

So I would like to get ideas and thoughts here who has bought property with tenants already in there? Pros? Cons? Things to keep an eye out for? Regrets?

Same question for people who have bought properties without tenants already there?

[John Williams]

Inheriting tenants isn't necessarily bad - just do your due diligence on them (as well as the property itself). Are there deposits on file? Do they pay on time (all of the time)? Review their applications and the screening process used to approve them as well. 

[Aristotle Kumpis]

One downside is that if they are already paying below market rent, you will probably never catch them up with rental increases. If you have rental history on them, that will also help. But the advantage of buying a home with a tenant is that you will already have someone paying rent when you close.

[Dale Adams]

Agreed, if the rent the tenants are paying works for you (i.e. on or close to market value) then it can be very much a positive.

If they are paying under current rates then that's more of an issue.

[Madri Koppe]

We inherited tenants and it was a positive thing. We reviewed everything prior to purchase so we had no concerns. We did increase rent after they vacated so if you have no tenants from the start you can start out with your desired rates. 

[Mike Tamulevich]

Hi! Like all aspects of investing, the most important step is to do your research on the home and tenant.

Review their original applications to ensure the current residents meet all qualifications. If you wouldn't accept the same application for a new resident, would you "let it slide" with this resident? It is also critical to view rental and payment history. Consider any late payments, issues with previous homeowner, etc. Having all of these details upfront definitely puts you in a unique scenario. Sure, the fill time can be almost non-existent, but you also may need to abide to standards accepted by the previous property owner.

[Roque Miranda]

Quote from @Michael Sheridan:

So I would like to get ideas and thoughts here who has bought property with tenants already in there? Pros? Cons? Things to keep an eye out for? Regrets?

I just got a duplex with tenants in it, one was M2M paying way lower than market rent but she was a 2 year tenant with a good record, I just renewed her lease increasing little to a number that works but still below market rent, the positve note is that she is paying on time and I didn't have to spend money in the property, the other tenant renewed a lease with us and paying close to MR, at the end of the day you need to do your due diligence and make sure the numbers work.

Same question for people who have bought properties without tenants already there?