Minimising your risk when buying a tenanted property
If you are looking to buy an investment property which is already tenanted, below is some important information you should review prior to making an offer. While there are advantages to buying a property that already has a tenant, it is important to do your homework so that you are not buying someone else’s problem.
You should ensure the below is available:
- Lease - This should be included with the Contract of Sale. If not ask for it. With the lease you can confirm how long the people have been in the property and what was the starting rent. It would also be important to confirm that the current tenants match the names on the lease.
- Condition Report - This document describes how the current tenant should return the property when they leave. Ideally it will be very detailed and not hand written with a description against each item. If there is no description it makes it difficult to hold the tenant to account when they leave. If it is hand written make sure it is legible, as it may be difficult to read again and it makes it hard to hold the tenant to accountable.
- Rental Ledger - This will show how the rent has changed over time and will also show if the tenant pays their rent on time. Sometimes ledgers can be hard to read so feel free to contact us to interpret them for you if needed.
- Last Rent Increase Notification - And what the previous rent was. This is important. Often rents are put up just before the property goes on the market. Thus the tenant may actually be looking for a new property because the rent is too high.
If you need any assistance to understand any of the above documents or on how to approach the selling agent with these requests, please contact Perry Beebe on 0419 174 168.