Purchasing SFH With Tenant in Place

[Joel Polanco]

How do you guys feel about purchasing a property that has a tenant already renting it? I am going to purchase my first investment property in Jax in the next two months, and I met with a realtor yesterday. She asked me if I am okay if the property already has a tenant in place, and since I was blindsided by the question, I told her yes, that I'm okay with it. But I don't really know much about this. I know that if I purchase a property with a tenant in place, that I am going to ask for pay stubs for rent for the last 12 months, but that's about it. Can I get some advice please?

Thank you

Joel

[Tracy Streich]

Do you want income coming in day 1?  If the answer is yes then why not buy with a tenant in place.   Questions to ask?

Is there a lease in place and what are the terms?  Don't believe what anyone says read it yourself. 

Owner managed or professionally managed?

Are they current?  Get a copy of the tenant ledger if it is professionally managed this should be easy to produce. 

How much deposit is held and who has that deposit now?  Make sure this is accounted for at closing if not you may get stuck owing a deposit you never collected from previous owner. 

Get all updated contact info for the tenant prior to closing. 

We buy and sell properties all the time with tenants in place.   Also they are not going to give you 12 months of pay stubs.   They are already in the house.   You buy it with the current lease in place or they have to have the tenant out when you close.   There is not really any middle ground for you to screen the tenant again.  If they are there when you close they are there until the lease expires, they move or you evict.  Just make sure to ask all the questions so you are not blind sided with something.   Buying with a tenant in place and no vacancy can be great.    We never do major renovations on occupied properties.   If tenant is paying what you want in the property as is just wait for them to leave and renovate when vacant.  Then you can push the rent.   They are under lease.   You can do major repairs and still not be able to raise the rents.   Save the money and renovate on your terms not having a tenant making you work around their schedule.