Buying a Property with a Tenant

Hi,

I am buying my first IP with a tenant and am wondering what the process is at settlement. He is renting through another agency that I am buying it through and has a periodic lease. I will be self managing the property. Is the current PM liable to hand over all his details to me at settlement? Or am I supposed to approach them? Or does my solicitor get his details? I will be offering him a new lease.
 
Not familiar with the tenancy laws in the ACT but a new lease agreement would be signed between you and the new tenant starting on the day of settlement.

If self managing then you would approach the tenant directly.
May be worth engaging the services of a property manager to do this for you?
 
My suggestion would be if you are new to property investing, then it might be worth leasing out the property with an agent for 12 months and learn the ropes, before you jump right into the deep end.
Food for thought perhaps.

Just my 2 cents :D
 
As the tenant is happy to stay I thought I would try self managing it and if it gets difficult pass it over to a PM.

Thanks Colin, I will look into that idea of setting up the lease for me.
 
My preference is to get vacant possession.

I've heard (but not experienced) stories about tenants breaking stuff and getting away with it because the new owner can't prove it wasn't previously broken etc (usually due to crappy ingoing inspection reports).

But if the place is getting higher than usual rent and/or is a hard place to rent out, then I'd keep the existing tenant there. I would say the keep the tenant if they're good, but how would you know they are good or bad ? I wouldn't be taking the agents word thats for sure.
 
It's different per state I think.
In sa you inherit the existing lease.
I bought 3 there this month with leases ending in November, February and March. I'm happy to keep them - saves me having to find new ones.

The existing PM called me and said they want to keep managing but they got a negatory :)
 
But if the place is getting higher than usual rent and/or is a hard place to rent out, then I'd keep the existing tenant there. I would say the keep the tenant if they're good, but how would you know they are good or bad ? I wouldn't be taking the agents word thats for sure.

Get the references from the current manager. Plus you can see how the house is kept when you inspect it before purchase.
 
After reading the fine print any existing tenant will be handed over to me through my solicitor. I'm happy with that. I just wasn't sure if I had to go knocking on the other PM's door searching for all his details.
 
As you'll taking over the lease with the current tenants, I would be getting your solicitor to contact the managing agent to release the following on Settlement:
- Keys to the property (that the agent is holding)
- Current Lease
- Ingoing Condition Report
- Current Tenants Application form
- Change of agents/owners bond form (signed by the old PM)

I hope I have not missed anything..

I would also send a letter to the current tenants before it settles so they know you'll be taking over the management and where they should be paying their rent and how.

I would also organise a Routine Inspection as soon as you've taken over the property to meet the tenants and find out the condition of the house. Make notes and take photos if you can. (obviously you can't do the ingoing condition report again but atleast take basic notes of the condition).
 
Great thinking Michael.
i hbought one property with a tenant which was leased by the same company. BUT they neglected to tell the leasing agent and rent got paid to the previous owner after settlement. All good but took a while to fix.

As tenants pay in advance they need to sort the rent out beforehand.
 
haha yeah much easier to get it all sorted out now before settlement so there is no stuffing around after it - when its twice as hard.

Tenants will appreciate being contacted now so they are aware of what's happening.
 
Back
Top