Buying A House With Tenants Who Are Still Occupants
This ARTICLE On Buying A House With Tenants Who Are Still Occupants Was PUBLISHED On September 15th, 2020
Buying A House With Tenants Who Are Still Occupants happens if you are buying a home from a real estate investor.
- It is very common to have tenants on a home you are purchasing
- There can be benefits when buying a house with tenants if you plan on living in the home
- If you are a real estate investor or are not in a hurry to move in after you close, you can benefit from collecting rent
- The housing market is booming
- There is more demand for homes than an inventory of housing
- During a hot housing market, buyers cannot play hardball and demand the home seller to evict or buy out the lease of the tenant, or else there is no deal
- The housing market is booming even with the coronavirus pandemic
- There are many homebuyers willing to purchase a home with existing tenants and deal with the tenant issue after they close
- Buying a house with tenants in common when homebuyers are purchasing rental properties
- Gustan Cho Associates are experts in helping home buyers in buying a house with tenants
In this article, we will discuss and cover Buying A House With Tenants Who Are Still Occupants.
Risks And Rewards In Buying A House With Tenants Who Are Still Occupants
The housing market is booming despite the coronavirus outbreak.
- Housing demand is higher than inventory
- Many homebuyers do not have a choice when buying a home with tenants on a lease
- Homebuyers are just grateful they can buy a home with such a short supply of housing inventory
- Buying a house with tenants is great if you are a real estate investor buying rental properties
Jammi Cash is a senior vice president at Gustan Cho Associates. Jammi is a residential and commercial loan officer at GCA Mortgage Group. Jammi is also a real estate investor.
Jammi Cash said the following when buying a home with existing tenants:
If you’re an investor who wants to become a landlord, buying a tenant-occupied investment property can be appealing in a way that you will start earning rent income as soon as you buy the property. However, the process becomes complicated if you want to buy the house as your primary residence and not as an investment property. It is essential to know what to expect when buying a house with tenants and be aware of the potential challenges you might encounter. There are certain guidelines and obligations that you need to know before deciding to buy a tenant-occupied property. Most investors would prefer to screen the tenants and set their own terms and conditions in the lease agreement. However, if you buy an investment property with existing tenants, you will have to commit to the current lease agreement until the term of the lease ends. Therefore, you need to completely understand how you can manage existing and future tenants legally from raising rents to evictions.
In this blog, we will be discussing things you need to know when purchasing an investment home that is occupied by a tenant.
Primary Owner-Occupant Resident Or Investment Home
Homebuyers purchase a property with existing tenants who are either real estate investors who are willing to keep the tenants as renters or those who intend in evicting the tenants and live in the home.
- Just because someone has purchase a home with tenants, it does not make the existing lease agreement null and void
- Tenant leases are tied to the property itself
- The new homeowner is legally bound to the existing lease agreement until the lease expires
- The new homeowner needs to abide by the term of the existing lease
- They cannot increase the rent, modify clauses on the lease, or decide to terminate the lease due to new ownership
- The lease agreement should be carefully reviewed prior to signing the real estate purchase contract
Michelle McCue of Gustan Cho Associates said understanding the rights of tenants is very crucial and important.
Here is what Michelle McCue said:
Understanding the rights of the tenants is crucial in buying a tenant-occupied property. There are certain guidelines that need to be followed especially when it comes to visiting and viewing the property. For expiring leases, it’s essential to give ample notice to tenants if you are not planning to renew their lease. Ideally, tenants should be given 60 to 120 days’ written notice that the lease is being terminated. You should also give prior notice to tenants if you are planning to change the terms of the agreement. Buying the house as an investment property means you are willing to take the role of a landlord, so you should be aware of the obligations that come with it. Your obligations as a landlord may vary depending on what was stated in the lease agreement. In general, you should be responsible for providing a safe and habitable environment for the tenants. This means you should ensure that the common areas are clean and in good condition and that the physical aspect of the property is well-maintained. Other possible landlord obligations include the need to provide the tenants with access to running water and heat, arrange for trash removal, perform regular maintenance of HVAC systems, and ensure that necessary repairs for the property are done.
You need to make sure you are familiar with tenants’ rights in your city, county, and state if you decide to do something drastic like terminating the lease.
Buying A House With Tenants That You Intend In Occupying As A Primary Residence
Try to avoid buying a house with tenants that are not paying rent or squatters. Each municipality has its own code and laws when it comes to evictions. Some counties and states have tough eviction laws and favor not paying tenants versus landlords. Even for real estate investors, it is better to buy a vacant property and get your own tenants in than a property with tenants who you do not know their backgrounds. If you are intending in living on the home you are buying with tenants, see if you can buy out the tenants. You can offer the existing tenant cash for them to break the lease earlier than the expiration date. Worst-case scenario, you would need to wait until the end of the lease term before being able to move in.