If you’re thinking about buying a rental investment property, you may find yourself considering a property that has existing tenants.
As a buyer, particularly if this is your first time as a landlord, it can be hard to know whether existing tenants are going to be an advantage or a disadvantage to you. Realtor® Keven Braet says existing tenants can be a great way to make a smooth transition into an investment property, but there are also potential issues to be aware of.
“Placing tenants is arguably the most important skill in being a landlord. A good tenant is worth their weight in gold. A bad tenant is a nightmare that will leave you wondering what possessed you to get into the rental investment business.”
In deciding whether to take on a property with existing tenants, Keven recommends considering a few key questions about the tenants themselves:
- Was the existing tenant co-operative and easy to deal with while you were viewing the property?
- Was the property well kept?
- Did they criticize the previous owners or point out insignificant issues when you were viewing the home?
“If any of these issues are leaving you with any doubt about a tenant then do not buy that property. You could be taking over someone else’s nightmare.”
When purchasing a tenant occupied property, you are not only taking on existing tenants, but the agreements they reached with their former landlords. Keven says it is important to be aware of the agreements reached with the previous property owner.
“You are obligated to the agreement reached with the previous landlord. This includes rents, payment schedules and rules so be sure you know what was agreed to before buying a tenant occupied property.”
Keven’s advice is to think of being a landlord as a business. Do everything by the book. Keeping proper records and agreements, conducting proper inspections and giving proper notices is the best way to protect yourself and your investment.
If there is one document all landlords in British Columbia need to be aware of, it is the Residential Tenancy Act.
“The number one problem for new or uninformed landlords is their complete lack of knowledge of the Residential Tenancy Act. They assume that being fair and reasonable with their tenants will mean their tenants will be fair and reasonable with them. You will need to rid yourself of this misconception or you may pay a hefty price for the learning curve. What counts in BC is the Residential Tenancy Act and only the RTA.”
The good news is, you don’t have to figure all this out on your own.
“Get professional advice from a knowledgeable Realtor® or Property Manager with a property management license. Do not rely on the advice of a friend that has a rental property.”