Ready-to-rent property - Turn-Key

Property for Rent - Turn-Key

Ready-to-rent property - Turn-Key

 

Hello dear friends. I missed you!

Following on from my previous post on rental prices - I wanted to continue talking about the rental and tenant issue, and this time from a different angle.
In a post I came across in another group, one of the members wrote that for him an attractive deal is a “working” property that comes with a paying tenant.
So first of all, a turn-key rental property is a property that someone has already purchased and renovated before you so you may be working a little less hard here,
And maybe (with a real emphasis on maybe) you start earning right away, but you give up on the betterment here, and you pay a price for that as well.
That doesn't necessarily mean it can't be a good opportunity or the price doesn't pay off - but it does mean there was another hand on the way, and that hand made a profit.
But the point of view I want to present is another point that concerns the tenant.
The fact that the property is "working" at the moment, or "worked" in the last year, not only does it not predict anything about the future (real estate is not an exact science, etc.),
However, in my experience many times the fact that the property is being sold with a tenant does not bode well for several reasons (there are many more reasons, but I will present 4 particularly relevant):

1. Out of the dozens of properties we have purchased for investors in recent years that have had a tenant, I can unequivocally conclude that tenants simply do not like changes. No changes by the property owner, not by the management company, and in general anything that gives a sense of “what's going on here? Everything was a turn .. Leave me with your mother ". Their lack of affection for change can end in late payment at best, but sometimes also in non-payment and eviction of the tenant. And we do not like to evict a tenant. Never.

2. "Sophisticated Tenant Syndrome." It is very similar to the previous section only that the attrition element is added to it. Not only does this tenant not pay, he also comes up with facts he invented or requirements and conditions such as: "The previous owner promised to lower my rent" or "I was promised to replace my entire kitchen" or "I already paid six months in advance in cash (or telepathy) to the previous owner ”.

3. "Knocked Tenant Syndrome." A true story that happened to us recently .. It became clear to us after the closure that the owner of the property closed in front of the tenant informally and is not anchored in a normal agreement that he sells the property to him at Rent to own. The poor tenant paid some rent money thinking it was down to the price of the property they had agreed upon. Disgruntled tenant - fun life.

4. Lack of proper inspection. I came across a lot of buyers who because the property is rented go out from the premise that everything is fine with the property because there is a tenant there. Do not do inspections of the property, do not evaluate renovation or renovation that needs to be done on the property ... and simply believe that everything is really fine because the property "works".

In short, not all glitter is gold, and not every “working” asset will continue to work. While this may seem tempting, especially to the impatient between us (me!) But it is important to see the whole picture. Good luck 🙂

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