3 things you need to know when buying a tenanted property
While buying a property with a tenant in place may not be ideal if you are thinking of residing in the property, it may have some advantages if you are buying the property for investment purposes.
For starters, you have a guaranteed income the moment you exchange, so you won’t be spending time or money in advertising and finding someone to rent it.
In this article, we take a look at what you need to consider and some question which will need to be asked why buying a property with a tenant for investment purposes:
- Find out who your tenants are
When it comes to investment properties, it is critical you have the right tenant; you need to ensure your tenants will pay the rent on time and keep your property in an acceptable condition.
Before signing on the dotted line, it is acceptable to ask the seller about your tenant’s background. This includes:
- What they do for a living
- What their reported income is
- How long they’ve lived there
- Do they pay rent on time
- Have they caused any problems
- Are their requests, such as for maintenance, reasonable
If you find out there have been things like multiple missed repayments, undue property damage or breaches of the lease in the past, this could be grounds for early termination of the lease agreement.
- What lease agreement is in place?
If there is a lease in place, you need to find out which type it is. Leases can be periodic (no set end date), fixed term or a month-by-month basis. You cannot break the terms of the agreement and will have to see the lease through to its conclusion.
There may be some exceptions; for instance, if the tenant has fallen behind in rent, caused significant damage or used the property for illegal activity. You could have good reason to apply to a civil and administrative tribunal and ask for earlier access.
You should also know the amount of rent they are paying – is it at the current market value? It may be possible to increase the rent when you take over the property, but this has to be done within the legalities of rent increases depending on the type of lease agreement in place.
- Can I change property management agents?
Yes, you can change property management agents. The only thing you have to do is to inform the tenant and update these details on the lease. When we have taken over rental properties in these situations, we have ensured the process runs smoothly and quickly, and we soon build a positive professional relationship with these new tenants.
From finding tenants, screening them, ensuring they pay the rent on time and are properly looking after your property, to arranging tradespeople to carry out essential repairs and maintenance, we manage every aspect of your property. Plus our detailed monthly and end-of-year financial reports help with budgeting and end of year tax returns.
Our experienced team will also suggest ways in which you can improve your property; that way you can maximise rental return and get the best return of investment from your property.
We’d love you to get in touch to tell you more, and demonstrate how our property management services can make your landlord experience easy.
Drop into the Cardiff office or give us a call on 02 4956 9777. Or send us an email at mail@newcastlepropertymanagement.com.au – we’ve helped many people realise their financial dreams through property and we’re keen to help you.