Current Ownership – things to consider
Getting down to the “quick” relating to Tenant Occupied Investment properties:
- Your client needs to obtain current copy of executed lease and any addenda or extensions;
- Who holds security deposit – and it will need to be transferred with sale or dealt with utilizing a price reduction based on said amount if landlord holds;
- Payment history, and whether tenant is or has been in default on the lease;
- Is the lease fair market rental rate?
- Your client needs to request Tenant executed Estoppel Certificate prior to COE;
- Pet rights should be considered.
- Are all parties living on the property noted in the lease;
- Is there HOA, does tenant have copy of CC&R’s(conditions, covenants, and restrictions), and has tenant complied with CC&R’s without notice or fines during their tenancy?
- If it is month to month, investor should be aware that tenant can give 30 day notice to vacate, but Landlord must give 60 notice to vacate, if Tenant has occupied property for over 1 year.
Investing in real estate
Whether there is a current tenant in place, or you buy a vacant property, reserves are necessary for a successful investment strategy.
The amount of your “funds in reserve” are going to depend on how long your particular state takes to legally enforce an eviction action against renters/tenants.
They will also have to consist of the amount it will cost to hire an Eviction Attorney to handle any potential eviction.
While a savvy investment realtor can help you, they cannot guarantee that issues won’t arise.
Just make sure you do all of the due diligence before embarking with investing in Real Estate.