There’s so many option when it comes to purchasing investment property. You can buy secondhand property, new property, or tenanted property. Every option carries its weigh and risk. Before deciding to choose one of them, make sure to calculate every risk and weigh because you can’t let your money go to waste by buying the wrong property.
How about buying tenanted property then? Is it good idea to choose or otherwise?
Weighing the option of buying tenanted property
For a quick glance, buying tenanted property makes a lot of sense for you as an investor. The good part is that you don’t have to pay for a letting fee. You also don’t need to worry about how to find tenants to rent your property.
You just can get monthly income right after buying the property. However, making rash decision just because of tempting surface is not always good for investor. Therefore, make sure to consider various factors before deciding to purchase tenanted property.
- There is a risk that you could inherit irresponsible or less desirable tenants. What if the already tenanted property you buy is occupied by tenants who are always late to pay for the rent or don’t treat the property properly? If you buy the property with this type of tenant, it can cost you more money as well as time. It can also put your investment career in jeopardy. What if the tenant is the reason why the previous property owner decide to let go? This is possible risk of buying tenanted property which doesn’t mean it is always the case. This should be at least included into your consideration.
- Aside from the possibility of inheriting problematic tenants, there is also risk of problematic lease documents. There is possibility that you inherit lease documents with hidden troubles. This can lead to bad scenarios if you are not prepared of this risk. Aside from problematic documents, there is also case of tenanted property with no documents at all. This is of course much worse than problematic documents.
- The next thing to consider before deciding to invest in tenanted property is the PCR or Property Condition Report. This is important for a property owner because it is supposed to contain necessary information regarding to the condition of the property in the beginning of the lease. If there is lack or no details of relevant information, it can cause bigger problems in the future. You will not know if the property has been damaged because there is no concrete baseline for comparison in the first place.
Those are risks you should consider before deciding to buy tenanted property. To avoid problems in the future, make sure to be attentive about the documentation.
Make sure to review them thoroughly and weigh any possible option. If you have difficulty to review or analyze documentation, you can always as your property manager to help you handle this matter.
They have knowledge and proper skills to know if the property is clear from possible problems in the future.