Two schools of thought. Purchase cash flow building from day one with existing tenants? Empty building with potential and screen you own tenants? Most problems I hear about with first investment properties are existing tenants. All thoughts appreciated. Thanks.
You do what the market gives you, and you adjust strategy to further your goals :)
So far we just purchased 2 duplexes (side by side) and they had existing 4 tenants. One moved out 2 months after we took over and the other 3, after 14 months, are still renting and have paid a $100.00 raise. We had no choice. As Ben pointed out, you do what the market gives you
I prefer to vet my own tenants to start the relationship fresh with my expectations for the unit. That being said you really never know what you'll get. I've had a tenant who, on paper, didn't seem that promising and she is easily my best tenant now - on the other hand had a very educated gentleman with a nice family and a great credit score and he has been horrible. Good luck Stephen!
I definitely prefer to buy properties without tenants. I want to put my own in there. Besides, it gives me the chance to make repairs, paint etc.
I once purchased a house with tenants in it, and they were terrible. I got them out pretty quickly.
I wouldn't rule out buying a place with tenants. But, I have learned to do my due diligence on them first.
It can go either way. It's a mixed bag. We're not afraid to purchase with tenants in place. Sometimes if you take over another landlord's headache you can get a better price at the buy. If you're good at property management, you'll be fine... you will do what you need to do. The tenants will soon learn your management style and will adjust or will move on. Do your due diligence so you have a good idea in advance as to what to expect.
There are too many unknowns with an existing tenant -- some people place people just to place them. I'll choose the empty building pretty much every time. I know what I want from tenants.
But there's the business side of the question, too: if you're talking about a small property with only a few units then vacancies can be filled quickly. If you're buying an empty 50 unit building then you're losing money on day one and it'll take time to fill the property.
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