As investors, we often come across properties that seem to be good deals, but there’s one big issue: the current tenants.
It becomes obvious that the current owner isn’t managing professionally, they didn’t screen properly (or at all), and they’re selling because they’ve created a major issue with the current tenants. They aren’t paying rent. Even if they did, it’s half of current market rates.
The landscaping has been neglected for decades. There is stuff piled floor to ceiling, and the last time the carpet was vacuumed, Richard Nixon was president.
On paper, it’s a good deal—the numbers could work—but who wants to deal with that mess?
Someone Else’s Problem Can Be Your Opportunity
Well, maybe you do. In real estate, we get paid to solve problems. The neglected property with the problem tenant is one of the most lucrative problems you can solve, but you wouldn’t know it if you think of it as a major problem rather than as the opportunity it truly can be.
Tired and inefficient landlords sell because they don’t want to deal with the problems they created, but they’ll pay you to take it on. As a matter of fact, they have to pay you to take it on because those issues directly influence the marketability of the property but not necessarily the value.
That’s where you come in. If there’s a tenant in place, in most cases, an owner-occupant cannot or will not purchase the property, so that eliminates 90% of your competition right there.
If you are a buy-and-hold investor, every tenant is temporary, but the returns from that property could last indefinitely. This is why it’s vital that investors don’t miss the forest for the trees—taking these deals on can be an excellent way to build equity and a performing portfolio.
Four Terms to Include in the Offer
If you want to take advantage of these opportunities, you need to be proactive in how you underwrite and offer on these deals. It is imperative…