Buying property is both a stressful and exciting time for someone. However, it is very important to be aware of your responsibilities, especially if you are buying a tenanted property. We have created a quick guide of things to keep in mind when embarking on this adventure.
Know what you are getting yourself into
You’re actually doing this one right now! Do your research and find out what others have experienced when purchasing a tenanted property. There are many sources online (such as us) that will go through the hurdles others had to jump and what they did to overcome them to help you with your new investment.
If you decide to buy, know who is in the tenanted property
Ask the seller about the tenant including their career, their track record when paying their rent and how long they have been on the property. You should also be asking about the type of lease the tenant or tenants are locked into.
Be familiar with the lease agreement(s)
Continuing from above, knowing the specific lease agreement the tenant(s) has will allow you to plan your next steps. This can be anywhere from fixed tenancies to possible sublease agreements. Once you know all this, you can then think about what you want to do with the property. Whether that is to slowly get rid of all the tenants for a complete uphaul or to try and retain them to ensure financial stability, it’s entirely up to you.
Possibly terminating tenancies
If you decide to go down the path of a complete uphaul and want to end the tenancy, you need to give the tenant notice. The notice time frame can range from 14 days to 90 days depending on the circumstances at hand. NSW Fair Trading expands on this a little more here.
Know how much the property is being leased out for
Knowing what the rent price is will allow you to map out your visions for your new property. Keep in mind, however, unless stated otherwise, you won’t be able to increase the rent of the property while any fixed tenancy is still in place.
Be aware of any required maintenance
During your initial inspection of the property, keep an eye out to see if any additional maintenance is required. Also consider if the damages you find were made by the tenant, thus, allowing you to dip into their bond.
Secure a great property manager
Be aware that properties don’t necessarily come with a property manager even if the previous owner had one. Having a great property manager makes owning and maintaining an investment property much easier for you.
If you would like to keep the current property manager, look into speaking with the current owner and tenant(s). They will help you grasp an idea of their experiences with them. Depending on their experiences, you can choose to either stay with the current property manager or look into a new one.
If you are looking for professional or legal assistance about purchasing a tenanted property, it is always a good idea to consult a property lawyer for legal advice.