Should you buy tenanted properties ?
Should you buy an investment property with an existing tenant ?
Many inexperienced property investors think that buying a?property with an existing tenant is a great idea; they often?like the idea of not having?to worry about finding a new tenant and having the property?vacant while doing that...but...wait...why would somebody even SELL a property with a tenant ??Quite possibly because the tenant is a "nightmare" tenant. And there are different shades of "nightmare" tenants like late payers, loud and messy tenants, tenants that like to fight with neighbours and tenants that forget to pay rent.?
I generally don't?like buying properties with an existing tenant as I rather place a quality tenant screened according to my best practises.?The extra upfront investment of time and cost?on your part will very often serve you well in the medium terms.
But whenever I have bought properties with existing tenants this is what I have done?(and you might want to do the same):
??Obtain a copy of the Lease Agreement?signed by all parties,?including all FICA documents.?The Lease Agreement continues to be "valid" irrespective of the change of ownership. So you?want to know what kind of leasing?deal you are getting yourself into. Check things like lease end date, escalations, special conditions and deposit clauses.?No signed lease???? Run for the hills?
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??Ask for the last 6 months rent roll /?bank statements to ensure tenant paid in full on time, all the time.?Do not believe what the Seller and / or the Agent tell you. Obtain proof and sleep well.
??Get the deposit paid over to the Conveyancer as part of the deal.
Don't hope and expect that the Seller will send you the deposit money the day after the?property registers in your name. They normally end up having all kind of "excuses" why the deposit was used and they no longer "have it" (or somebody else has it). Include in the signed offer to purchase the following clause?"The Seller warrants that he / she / it holds a deposit of R xx,xxx and such deposit will be paid over to the Conveyancer prior to the Conveyancer lodging the transfer?with the Deeds Office. The Seller further authorises the Conveyancer to pay over?such amount to the Purchaser on date of Transfer".?Problem sorted????
I look forward to continue to guide you and support you to Fast Track Your Property Success.
Carlo - ThePropertyCoach