Renting property before closing?

Question

If I'm purchasing a SFH for rental, can I lease the property before closing?  The tenant would move in after closing but the lease would be signed before hand.  Any considerations or thought on how best to go about this are appreciated?

Vijay Prabhakaran · Answer

Tracy thanks for your response. Micheal I have not approached the current owner yet but he is a friend so I don't expect that to be an issue.  I'm also wondering if you can post a property like this for rent on the MLS?

Michael Noto · Answer

Well let's start here @Vijay Prabhakaran did the current owner give you permission to show an apartment in a house that you don't own yet?

Tracy Howard · Answer

One important thing that I left out.  I communicated all of this to the tenant up front and he understood that there was a chance it could delay.  If your tenant is unaware of the closing situation then you are not setting yourself up for a good landlord/tenant relationship.

Tracy Howard · Answer

@Vijay Prabhakaran,  I've done this with a recent property.  To protect both parties,  I used a commitment letter to insure that the tenant would receive their security deposit and first month's rent back if closing did not occur. Additionally, if there was a delay in closing then I identified how we would prorate the first month's rent.  In this instance, the closing was delayed several days and I closed on May 1st @ 5pm and the renter started moving in 2 hours later.  The unit was in great shape and required very little work which the renter was happy to let me come in over the next week or so to take care of.