The opportunity to expand your property portfolio is an exciting one, and in most cases a well-considered next step in reaching your property goals.
Finding the right property can take time and there is much to consider including terms of purchasing price, condition of the property, location and performance in the market. Ensuring the right property aligns with your goals is important.
With the purchase of any property, the importance of ensuring you complete your due diligence should not be understated. Understanding the property, the location, and finances associated will prove beneficial in the overall ownership of the property.
When purchasing a new property as an investment opportunity, it’s important to consider if the property is ready to lease, if it requires work to be done and how it will be positioned amongst the local rental market.
Purchasing an already tenanted property adds another element to the purchase. It’s not a bad thing, in fact if you consider the purpose of the property is to be rented, you’re already there! It just may add other considerations regarding your obligations as a property owner and landlord.
It’s important to understand the circumstances of the lease and the tenants renting your property. Whatever lease terms are in place with the current tenant will remain the same; conditions and duration of the tenancy agreement already in place will continue. Ensure you are aware of what’s included and that the appropriate notice period applies for any changes. It’s important to be aware of any rental arrears, ongoing disputes or maintenance requests.
The selling agent, outgoing landlord or better yet, the current property manager should be able to provide valuable information about the leasing terms. If you’re planning to keep the current property manager, ensure you go through the lease terms thoroughly to discuss processes together. If you’ve found the property is leasing for less than what you believe it should, talk to your property manager about steps to remedy this.
Consider if the property adheres to the minimum standards required of a rental property. There may be ongoing maintenance or repair requests, or updates required to have the property reaching its potential. Understanding this prior to purchase will allow you a greater opportunity ensure work is completed in a timely manner.
Another thing to consider is that tenants may also be feeling a little nervous about their future in the property. If you have no intention of changing the lease terms, changing tenants, or utilising the property personally, it may be polite to let them know.
When buying a tenanted property, your property manager will be a valuable tool to make sure the process runs smoothly, with as little impact on not only the tenants, but through continuing to ensure the success of your property as an investment.