Inheriting the Tenant

Thinking of buying another investment property? If so, what are the pros and cons of buying the property and inheriting the Tenant who remains in occupancy on the date of settlement? The ‘pro’ of course is the fact the property will have a rent paying Tenant providing an immediate return.

However, be careful of the risks. We recently commenced the management of a Tenant occupied property on the day of settlement. When we picked up the paperwork from the other Managing Agent, to our horror we discovered that the rent was 3 months behind! The new owner didn’t even know. When we served the notice of termination it all became complicated with the Tenant doing a runner and leaving the property damaged.

Our advice:
For peace of mind, buy an investment property with vacant possession. Then the Tenant problem is the Vendor’s problem. If you decide to buy with the Tenant in occupation, consider the following:

  • Tenancy agreement (in full) should be a part of the contract.
  • Obtain a Tenant ledger from the Managing Agent prior to exchange of contracts. Check ‘paid to’ dates carefully. Is the Tenant a good risk?
  • Ask the Managing Agent to confirm currency of employment.
  • Be sure you do a pre-settlement inspection on the day of settlement or the day before settlement.
  • Sign a Managing Agency agreement for John Pye Real Estate to commence its new management on the settlement date. (We currently manage properties from Manly to Blacktown, Strathfield to Mooney Mooney).

At any time feel free to call either Terry or myself if you require further help in your investment purchase.

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