Purchasing a property with long term tenants- Pros/Cons?

4 Replies

I'm looking to tap into the Philly Real Estate market and was researching some properties. There were a few properties that have long term tenants that are active. I was curious if there were some pros/cons with purchasing a property that already has tenants? 

Some pros/cons I thought of:

Pros: Positive cashflow, no looking for tenants

Cons: they could be bad tenants, rent isn't paid on time, assuming a long term lease has been signed - can't evict them and rent could be under market value based area

Any other thoughts? 

You definitely touched on a lot of the main points. If they are bad tenants and don't pay on time or at all, you can still evict them because they are breaking the terms of the lease. If the old landlord didn't have a written lease, you will need to do a lease with them. If the rent is under market value with a long term lease, you should take that into consideration when purchasing and running numbers on property. Best of luck!

@Vinny Thong :

From my experience - if you can find out if they are "good" or "bad" tenants of course that is important, but more important is to check the lease. A good lease is a critical part of protecting yourself and mitigating potential problems. Some landlords download standard leases from the Internet. In Philly, you must get a rock solid lease AND ensure that you have taken care of all that is required by L&I .  I have not had positive experiences in inheriting tenants.

 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here