Should one buy an investment property with an existing tenant or should you buy a property & then put in the tenant? If the property for sale already has a tenant then you could get it at a price for the prevailing gross rental yield for that suburb?Less demand for a pre tenanted property because in today's market in Melbourne buyer's have to wait until the tenancy has expired before they can live in it? Landlord selling because of a problem tenant so could be buying a problem tenant? Any views on this conundrumThanks in advance.
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felboot – what suburb are you looking at?
Hello Friend..
If you are considering an buying an investment property, As you can see, there are many important items to consider with an investment property that you are considering to purchase. Your personal situation, financial ability and degree of involvement in your investment property will ultimately determine the type of property that you will purchase.
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Bucks County Real EstateI wouldn’t buy a property based on whether or not it had a good tenant/bad tenant or no tenant.
The current tenant doesn’t determine if the property is a good investment. If they are bad tenants you can kick them out and get new ones. If it isn’t tenanted then put it on the market, if your property is good it will be rented in a week or two. If you have a good tenant then an added bonus.I don’t think the tenant makes much difference to the sale price. You are not buying a tenant you are buying the property. But at least if it is tenanted you could work out what you rental return REALLY is.
I really don’t think a tenant would make ANY difference in price at all, unless you had a desperate seller.
Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click AwayRyan McLean | On Property
http://onproperty.com.au
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My 5c worth….
I'd say, subject to the rental market conditions, buying without a tenant has more advantages because very often the existing tenant will be holding over paying outdated rent. The certainty of having the property come pre-packaged with a tenant is a plus, however, it may be more beneficial to 'shop' for a new tenant who will pay more rent (especially true if the prices have gone up since the existing tenant's lease has been entered into by the vendor).
Also, not alawys but defintely sometimes, people are selling because their tenant is a 'problem tenant'. I recently purchased a property where the vendor wanted to sell subject to an existing tenancy. The tenant's lease has expired and his rent was rather low so I was keen to get vacant posession and find a new tenant. I managed to negotiate vacant possession. Later on while doing my strata searches I found out that my rejected tenant was a trouble tenant – saw letters to the agent from the strata BC complaining of constant yelling and domestics originanting from the unit and heard by the entire house!
@ EvaCD – What you said is brilliant. Because rental markets can move up so quickly if you buy a property with a tenant (on a long term lease) it can be a lot harder to get market rent because you have to wait until the lease ends.
I don’t understand why people sell because of problem tenants…why don’t they just kick them out?
Ryan McLean | On Property
http://onproperty.com.au
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