Would You Buy a Rental Property That’s Already Tenant-Occupied?

Question

I’m a newer investor focused on out-of-state rentals in the $80K–$125K range, mainly looking at BRRRR or buy-and-hold properties. I keep coming across listings that are already tenant-occupied, and I’d love to hear from others who’ve been down this road.

On one hand, it seems convenient — instant rent, no vacancy, and less work upfront. But on the other hand, I’ve heard some horror stories about inherited tenants, unclear lease terms, or below-market rents that make it tough to cash flow or raise rent later.

For those of you with experience:

• Have you bought a property with tenants already in place?
• What went well, and what would you do differently next time?
• How do you properly vet the existing tenant and lease before closing?
• Would you recommend it for a first out-of-state deal, or is it better to start with a vacant property and pick your own tenants?

I’m trying to weigh convenience vs. control before jumping in — your experiences and lessons would really help me (and others in the same spot).

Thanks in advance,

CR

Michael Murphy · Answer

CR - I'm a new investor and inherited one tenant earlier this year in 2-unit.  It was honestly one of the selling points for the purchase.  The tenant has been living in the property for over 30 years and was paying modestly below market rent.  However, the unit probably hasn't been updated since she first moved in.

The other unit on the property was a 1-bedroom that had been recently renovated and was delivered vacant.  More experienced investors advised me that it would be difficult to find and keep solid tenants in the 1-bedroom.  I got comfortable taking that risk because I had the existing tenant, which would almost cover the PITI.

So far, the inherited tenant has been excellent.  She pays early, takes good care of the place, and doesn't complain.  I did meet the tenant ahead of time and was able to see the condition of the unit.  Looking back on it I should have gotten an Estoppel Agreement to make sure that the terms of the lease were as the seller represented.  The rent and lease were as represented and I didn't run into any problems, but it was a risk I shouldn't have taken.  If the length of tenancy had been shorter I would have been much more hesitant on the deal.

Ricardo R. · Answer

Hey Christopher,

Chris, great question — this one trips up a lot of newer investors. Buying with a tenant already in place can be a win, but it’s definitely a mixed bag.

Here’s the deal: getting rent day one sounds awesome — no vacancy, no listing photos, no showings — but the flip side is you’re inheriting someone else’s tenant and their lease, for better or worse. If the rent’s under market or the tenant’s been a handful, that’s now your problem. You can’t just bump the rent right away either if they’re mid-lease.

What I’d do is dig into the details before you close:

• Ask for the lease agreement, payment history, and security deposit records.
• Double-check rent amounts versus market rates.
• If possible, meet or talk to the tenant — you’ll learn a ton from a five-minute chat.

Ask for the lease agreement, payment history, and security deposit records.

Double-check rent amounts versus market rates.

If possible, meet or talk to the tenant — you’ll learn a ton from a five-minute chat.

If the tenant’s clean, pays on time, and rent’s close to market — sweet, you’ve got instant income. But if it’s your first out-of-state deal, you might want the control of picking your own tenant and setting things up your way from the start.

Bottom line: inherited tenants can either be a shortcut or a headache — depends on who you’re inheriting. If everything checks out, go for it. If not, don’t feel bad walking away; it’s way easier to start fresh than to fix someone else’s mess; I hope this helps you a bit, I sent you a DM on BP... it's one of the reasons I do this, I hope you can assist. Thank you.

Allan C. · Answer

If you’re new to landlording, what makes you believe you will be better at tenant screening than the existing owner? Inherited tenants are indeed a mixed bag, but I think it depends more on the asset class than you having control. If you buy in rough areas you'll have rough tenants. 100% of my purchases come with tenants in place, but I focus on multifamily. Tenant risk can be mitigated but you'll have to do some diligence.

I try to avoid properties where flippers put tenants in place since they how lower criteria and focus on maximizing rent roll. For properties where tenants have been in place longer I tend to favor, but it’s important to walk the property to see the condition. You can also request an estoppel certificate to verify lease terms.

You should also learn the tenant ordinance of your area. How easy is it to evict or bring rents up to market? That will be important.

Ricardo R. · Answer

@Christopher Rubio I'm so glad I was able to help a bit. Remember take your time to always verify the documents provided by Seller to include leases, etc. Best to always get an estoppel from tenants.

Christopher Rubio · Answer

@Ricardo R.

Thank you so much for breaking that down — this is exactly the kind of perspective I was hoping to hear. You nailed it — getting rent from day one sounds great, but I can see how inheriting the wrong tenant or a bad lease could become a headache fast, especially for a first out-of-state deal.

I really like your practical advice about reviewing the lease, verifying payment history, and checking rent against market rates before closing. Talking to the tenant directly is something I hadn’t thought much about, but that’s a great idea — sometimes a short conversation tells you more than a stack of paperwork.

Appreciate you taking the time to send a DM as well — I’ll check that out. Thanks again for the detailed breakdown and for being willing to help new investors like me navigate these early decisions.

CR

Marcus Auerbach · Answer

Inherited tenants are a coin toss. They can be great, but often times they feel they have seniority over the new owner, especially when they are older than the investor. This gets amplified if the new owner is a green landlord.

Most agents don't know what an estoppel letter is, just ask them to confirm the key terms of the lease and in person is almost better. Also ask what their intentions are, stay or leave, especially if you are planning to increase the rent, now is the time to tell them.

If there is stuff in the attic and the basement the seller may tell you it belongs to the tenant and when the tenant moves out they will say it's not theirs, so now you have to deal with it. This BTW is a great example for a small issue if you are local - and a big headache if you are OOS and have to troubleshoot and resolve this remotely.

$80-$120k is probably the price range with the highest risk profile for a landlord. And the hardest to make a BRRRR work - take it from someone who has been BRRRR-ing for over 15 years in Milwaukee.

Chris Forbush · Answer

Great questions and great answers. As always with your posts. I'm learning a lot from what you're doing here. I know you'll do well if you apply what these experienced folks are saying. I look forward to hearing of your success and hope to one day put some deals together with you Sir.

Mark Cruse · Answer

I have done it several times. It can go either way. For me, since I'm experienced it doesn't matter. If they are a bottom feeder, get rid of them and on to the next. If they are good, it works out. When I was more of a rookie, I got a multi full of tenants. I got it from a wholesaler. Now, I would be very very very weary of getting anything like that from a wholesaler. If it was a very good deal, with only a few units it's all good. The one I got was stocked with sht bird degenerate tenants. None of them could make it past one or two months of rent. One took a dump on my kitchen floor.  I ended up with an empty building. The wholesaler was either very incompetent or didn't screen anything. Who knows. You have to remember; the wholesaler has no motivation to care about what is left there. It sounds good when they can deliver a building fully rented. I would suggest whatever you do, try to determine the history and get an accurate scope of their rent rolls. Like I said it can go either way, but really delve into the tenant pool, so you can at least be somewhat aware of something. As you gain more experience, I doesn't matter as much.

Good luck.

Christopher Rubio · Answer

@Allan C.

That’s a great perspective — and you’re right, it really comes down to the asset class and tenant profile more than just who does the screening. I’m still early in my investing journey, but one of my biggest concerns with out-of-state rentals has been inheriting someone else’s problem tenants, especially in lower-class areas where turnover and maintenance can eat into returns fast.

I appreciate your tip about flipper-placed tenants — that’s something I honestly hadn’t considered but makes perfect sense. Their goal is often to make the rent roll look strong on paper before selling, not to build long-term stability. I’ll definitely be asking for estoppel certificates and doing walkthroughs whenever possible.

I’ve been leaning toward small multifamily in B-class areas, ideally with tenants who’ve been there a while and a track record of paying on time. And you make a great point about local ordinances — understanding eviction timelines and rent-increase limits can make or break a deal.

Thanks again for the insight — it’s really helping me think more strategically about what questions to ask before buying tenant-occupied properties.

Christopher Rubio · Answer

@Chris Forbush

Thank you — that really means a lot. I’ve been soaking up all the insight and experience people have been sharing here, and it’s been a game-changer for how I’m approaching things. I’m definitely planning to apply what I’m learning and take action soon.

I appreciate the encouragement and would absolutely be open to connecting down the line once I start closing some deals — always great to build relationships with like-minded investors.

Would You Buy a Rental Property That’s Already Tenant-Occupied?

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