Property for Rent - Turn-Key
Hello dear friends. I missed you!
Further to my previous post on rental prices, I wanted to continue to discuss the subject of the lease and the tenant, this time from another angle.
In a post I encountered in another group, one of the members wrote that for him an attractive deal is an "employee" 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" over the past year, not only does it predict something 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. From dozens of properties we have purchased for investors over the past few years that have been a tenant, I can come across unequivocally that tenants simply do not like changes. No changes to the property owner, not the management company, and in general everything that gives a feeling of “What’s going on here? Everything was going on. Leave me to your mother. " Their lack of affection for the changes can end with a late payment at best, but sometimes with a non-payment and tenant eviction. And we don't like to contact 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 the whole kitchen" or "I already paid six months in advance (or telepathy) to the previous owner ”.
3. "Tenant Syndrome Fucked." A true story that happened to us recently .. It became clear to us after closing that the owner of the property closed in front of the tenant informally and that is not anchored in a normal agreement that he sells the property to Rent to own. The poor tenant paid some of the rental money thinking it was going down from the price of the property they agreed to .. In fact - the property owner simply sold the property and moved on with the tenant's purchase of rent, while the poor tenant got a new property. Disgruntled Tenant - Fun Life.
4. Lack of testing properly. I have come across a lot of buyers because the property is leased from a discount point that everything is fine with the property because there is a tenant there. Do not do property inspections, do not appreciate renovation or renovation that needs to be done on the property .. And just believe everything is really okay because the property is "working".
In short, not all gleaming gold, and not all property "works" will continue to work. It does seem tempting, especially for the impatient (me!) But it is important to see the whole picture. Good luck 🙂
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussiontags: turnkey Tenants Management companies Yariv Paz Taxation Investors renovation