Repairs for potential rental

[John Southard]

I'm looking at a potential first rental property and the house needs a lot of work. It currently has a tenant paying below market rent. At first walk through the house needs a new roof, not leaking but it's apparent it will need to be replaced within 5 years. There are other items needing immediate attention. If the tenant remains with the property how much renovation do you perform if the tenant is living with it prior to the purchase? For example, the Sheetrock behind the shower needs replacing. The owner claims the leaky shower is fixed but there is still the moldy ugly sheetrock remaining. So if I purchase this place and tenant doesn't request the sheetrock to be replaced do I just leave it until the tenant vacates? The owner claims the tenant wants to stay, paying below market rent. If purchased I will probably raise the rate to be more competitive. If I can get the property for 2% of rents I will probably pull the trigger but am not sure how much I should plan to put into the property immediately. My first inclination is to fix the shower regardless of whether the tenant requests. I do plan to have the property inspected professionally prior to purchasing.