Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
After all these years we definitely prefer vacant possession IF possible. Every inherited tenant we have endured didn't last 12 months except the 2 old ladies who had been there 14 years. But we immediately doubled their rent to mkt rents & they did not complain.
When purchasing a rental property, would you rather:
The unit(s) be vacant?
The unit(s) be occupied?* (*assuming rent payments are current)
Last thought, has this preference changed for you in light of the COVID-19 impact on your market?
Hi Bryan - having just purchased my very first duplex rental property last month with inherited tenants, I guess I would prefer the units be occupied. I feel like having tenants removes the task of having to find tenants right away. Sometimes you can get lucky. For instance, in one unit, the process of taking over as the new owner has been relatively smooth. He quickly provided his contact info and created a tenant account for us to communicate through tenantcloud and he has been paying his rent on time (even a few days ahead of time). The other tenant, however, has been a real headache...basically doing the opposite of everything the aforementioned tenant has done. As a result, I will be moving that tenant out next month to complete necessary rehab to raise the rent to market rate.
Having gone through this experience, I can also see the benefit in having vacant units and vetting your own tenants. In that way, you can be more certain that the tenants will meet your standards and make sure they are able to successfully meet all requirements. I will be doing that in the very near future!
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Bryan Noth I think your question was missing a very important piece of due diligence. You can not simply ask if you would rather have tenants or be vacant. While doing due diligence it is very important that you inspect each lease to understand the terms, deposits and end dates of each tenant so you understand what your actually inheriting. This also can affect your offer on the property.
Example, recently we acquired a 21 unit and the rents were $125-$150 below market rent. Great opportunity right????? WRONG! The seller had given 12 of the tenants a “sweetheart” lease for 24 months and they all had 22 months left on them. In Ohio when you buy the property, you buy the lease! So, we actually negotiated an additional amount off the purchase price due to this!
While your question had good intent, it did not contain enough content for anyone to make an informed decision.
Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Todd Pultz good thing you caught the extended lease terms for those 12 tenants during your due diligence!
Thanks for posting, your example highlights the importance of performing thorough research on each potential purchase. A great lesson for people looking to do the same
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
After all these years we definitely prefer vacant possession IF possible. Every inherited tenant we have endured didn't last 12 months except the 2 old ladies who had been there 14 years. But we immediately doubled their rent to mkt rents & they did not complain.