When it comes to buying a Miami property with a tenant you need to make sure that it makes sense for you and also you need to make sure if you need financing your lender will allow it. I discuss these points plus more in this video.
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Buying a Miami Property With a Tenant
Hey everyone, I’m Jamey Prezzi, real estate agent in Miami and Miami Beach. Today, I’m here to talk to you about what you need to know if you’re buying a property and it has a tenant in the unit. But before I get started with that, first, I’d just like to say thank you so much for following us every single week.
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OK, so today, I’m going to talk to you about what you need to know if you are buying a property that has a tenant in it. The first thing that you want to do is have a look at the lease. Ask your real estate attorney to review the lease just so that you know the terms of the lease. How long are they going to stay? Maybe if there’s a tenant in the property, maybe they’re leaving at closing. So, that’s fine. If they’re going to stay longer, you want to know how long are they going to stay in the property and what is your obligation as that new owner?
Because when you do buy a property that has a tenant in it, that lease that that current tenant has transfers over to you as the new owner. So you just wanna make sure that you have someone take a good look at that for you to make sure that everything makes sense and is done correctly, in advance, before you close. The next most important thing that you really wanna do is talk to your lender because if you need financing, you may not be able to purchase a property that has a tenant in it already and they’re going to remain after closing.
Some loans do not allow tenants to stay in the property because you may be purchasing it as your primary residence. Other loans are very suitable for this type of purchase because they are investor type loan products. So, if you need financing, you definitely need to speak with your lender before you go under contract to make sure you can even buy a property that has a tenant in it because you may or may not be able to and there’s nothing worse than going down that whole road and spending time and money on that and then to find out that you can’t really purchase the property.
Have a look over the lease and also, review the financials of that property and what the current tenant is paying because maybe in today’s market, that rent doesn’t make sense for the amount of money that you’re purchasing the property for. Sometimes people get tenants in the unit, they stay for many years and the rent is really low, and for what you’re buying the property for in today’s market and what the monthly maintenance is and what the taxes will be when you purchase the property, maybe financially, it’s not going to make sense.
So you definitely need to make sure that you run some numbers and make sure that it makes financial sense for you in today’s market. And the next most important thing you wanna do is ask if a tenant is paying the rent on time and if they’re a problem tenant. You just don’t want to assume the responsibility of dealing with a tenant that creates issues and doesn’t pay the rent on time. So, let’s recap really quickly.
Number one, have a look at the lease and find out what you are obligated to do as the new owner with that lease. Number two, speak with your lender to see if you can even buy a property that has a tenant in it. Number three, review the lease and the financials to make sure it makes sense for you financially in today’s market and number four, find out if they’re paying the rent on time and if they may be potentially a problem tenant.
Buying a property with a tenant in it is very common in our area because there are a lot of properties that are rented here and it is a very common process.
We know how to do it, we know how to walk you through it, and you just have to make sure that you have sort of all your ducks lined up, make sure it makes sense for you financially, and obviously that you can get a loan on a property with a tenant.
If you have more questions about buying real estate in Miami or Miami Beach, give us a call at 305-793-8965 and follow us online. Have a great weekend, everyone.