Recently Ive been doing online searches with my realtor to buy a tenant occupied property in Baltimore. We have no problems finding them but when we try to make an appointment to go see them we get the run around. We set up a date and they'll (the other realtor or property manage) will say Oh something came up lets reschedule and we won't hear anything back. They say oh the house is no longer for sale but we still see the listing several weeks after. This is the 3rd rental property I wanted to buy that this has happen with. It's understandable if people don't want to sell properties that are making them money but why would they list them as for sale. Some have been on the market over a year.
Is it my realtor? Should i just put a contract in site unseen with a contingency that a tenant must be in place at time of purchase? I don't know what to do but I really want and need to get things started please help.
As another Realtor who listed rented out property on the MLS, I wont make any appointments for anyone to see the home unless we have an accepted contract. The potential buyer can see it during their due diligence period.
I dont want the tenants to be constantly bothered with showings as it might spook them and they will move out.
@Tyrell Ferguson Tyrell, your experience is not uncommon at all. Maryland rental regs bend over backward in favor of tenants. A tenant can block a potential buyer from entering the property using a wide range of stratagems, one of which is to cancel an appointment arbitrarily at the last minute, and refuse to make another. I've seen a situation where a tenant refused to answer calls from the listing realtor in order to avoid setting an appointment. I've seen tenants bar the potential buyer from entering the house even with an appointment. Basically a motivated seller, or the property manager, must give the tenant the requisite 24 hour notice of entry and then be onsite at the time the buyer arrives, to be sure the house is seen. Very very challenging situation for landlords.
Not knowing a thing about the rental market and laws in Memphis, I can't comment on your rental-marketing policy. It may work fine if housing is plentiful and tenants are scarce. But based on my experience as a buyer of SFR rental properties in Maryland and DC, I would find those terms overly restrictive, and most likely would look elsewhere if I couldn't enter the house or meet the tenant before writing a contract.
@Tyrell Ferguson is there a reason you are only looking at homes with tenants in them? That is the exact opposite of what I would be looking for. It's a total liability to me to already have a tenant in place when I buy a home. I like to do my own screening thankyouverymuch.
Here's what I do and my the clients I represent. If the numbers on the deal look promising. Make an offer contingent upon an interior inspection at no cost to you. In Texas, we call this an option period. Basically, a period of time that allows the buyer to terminate for any reason they choose. If you don't like what you find inside walk from the deal. Happy tenants equal happy landlords of which you might be in no time flat.
Another angle, many times the listing agent or the property manager has interior pictures of the home that aren't necessarily ready for public consumption. They might be walk through pictures or listing pictures that didn't turn out well. Call them NICELY and explain your interest in the home and you're ready to drop the hammer on a contract but would like to see more of the inside. Explain to the agent that you don't want to waste their time nor the owners time without taking a look at those pictures. A no brainer for any listing agent to grant that request.
Originally posted by @Tyrell Ferguson :
Should i just put a contract in site unseen with a contingency that a tenant must be in place at time of purchase?
Put a contract in with a Contingency for inspection.
@Tyrell Ferguson - As a buyer of investments and a broker representing clients who buy investments, I can tell you that hands down the hardest part of what I do is scheduling appointments. It is very hard with tenant occupied properties for a lot of the reasons Curt mentioned. But I only buy occupied properties and sometimes I can't see a unit or two until inspection.
I find if I try and set appointments 48 hours in advance and then follow up every 12 hours I can see 95% of them
@Curt Davis I can't see making an offer BEFORE actually seeing what i am making the offer on? How the heck can I know what to offer? Why would I want to go through the effort to make an offer, then find out that there is no way I would buy the house?
I am having a similar issue with a duplex that interests me now. Having trouble getting in. As the home is over 100 years old, I must see it before making any offers.
scott, this is why you put a contingency in the contract. This also helps us to eliminate the tire kickers and know why is a serious buyer. Most of our buyers are out of state so this is usually never an issue.
You simply make your offer contingent on actual inspection.
@Tyrell Ferguson Hi TF. @Curt Davis
@Tyrell Ferguson Hi TF. @Curt Davis hit it on the head. There is not incentive to bother a perfectly agreeable and paying tenant. They want to sell but they have no obligation to let you see it. I have learned buying property like this is an art. If this is your first unit, your better to start fresh and acquire your own renter. Once you familiarize yourself with the product, area, etc buying property like this sight unseen becomes simple and more profitable since time is money. Good luck
Thank you all for your words.. I think I understand the situation a lot better now from a buyers perspective and from a tenant and owners perspective I really appreciate it. @Dawn Brenengen I wanted to get one tenant occupied because Im out town at the moment for a few months and with this being my first deal I don't know the whole screening process or hiring a manager process. So I was looking for a tenant who was already paying and just keep the same system in place that is already there. Same tenant same and same management...Im more afraid to pick up a new mortgage and have to worry about filling it. I'd rather just find a place thats already being rented.
For me, I like to get an accepted offer before I see a property like this. I want to make sure that the seller and I are in the same ballpark. I estimate repairs based on the pics in the listing. If there are none, I assume that the interior is in average or below average condition and adjust my offer accordingly. If the interior was nice, most Realtors would put those photos in the listing. They tend to leave those photos out if the property is a fixer. Once you do a walk through, you can renegotiate the purchase price or terms if things are different that you expected them. Real estate agents and sellers might get mad at this, but this is unreasonable if they didn't provide the info up front to you in the listing.
Personally, I don't like inheriting tenants because you can never be sure of the quality of the management that put the them in. Sellers tend to minimize the negatives and tell you what you want to hear. It's much easier to start fresh and put your own tenant in. You'll know that it was done right.
Of my 33 units I have bought 9 of them were vacant and of the 15 I am under contract to buy now all are tenanted. So far it has not been a big issue and as long you transition it right, most of the new tenants think we are the best thing to happen to them.
For the most part all the tenants stay and just sign a new lease with me, within the first 45 days we always have 1 tenant that moves out in the middle of the night, but it is what it is
@Tyrell Ferguson ...maybe your best bet is to buy a turnkey property? It might cost more, but all the work is done for you and most places will guarantee the rehab work and tenant income for at least 1 year.
I find that the longer I hold out on getting a property, the longer it will be for me to get into the REI game. Sure, a turnkey is more expensive than doing everything yourself, but sometimes doing everything yourself=never getting done.
In most instances negotiations are done before a contract is accepted but is is common for negotiations to continue after a contract is accepted in some situations. This is one of those situations.
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