Real Estate Investors: Rental Properties are the New Short Sale
By now, real estate investors know that short sales are a great way to purchase a property below market value. The problem: with historically low foreclosure activity and a solid economy, short sales are difficult to come by. So where can real estate investors now find below-market deals? Currently leased residential real estate properties.
When an owner of a rental property needs to sell, they typically need to do so in a timely fashion. When this occurs, the issue for the rental owner is related to the lease with their tenants. As you know, leases “run with the land” which means the current and any subsequent owner must honor the lease. As such, there are very few buyers interested in buying a home and waiting for a lease to expire, especially if it’s for a year. Additionally, financing these types of transactions is much more difficult as they are not considered owner-occupied transactions. So, whether it’s the limited financing options or the smaller pool of buyers, tenant-occupied properties can be a great way to secure a property below market value. Nevertheless, you could always try to consult firms like Address Property Consultants (visit them at addresspropertyconsultants.com) with all your property (buying and selling) related queries!
Keep in mind, this doesn’t mean that every investor selling a tenant-occupied home will take less than fair market value for that property. Fortunately for investors hungry for rental properties, there are many investors that will have to take less just to consummate a transaction.
If you’re thinking about investing in a rental property but unsure of when or how to get started, consider partnering with an experienced, local real estate office like ours to help you get started. A good agent with proper investor leads might be able to help you find the right investment property, navigate local regulations, review the lease and then help manage the property.
So if you’re an investor looking to invest in a rental property, not only is it possible to get a good deal on buying that property, but it may come with paying tenants as well. There is even the option for 1031 exchange real estate in order to maximize profits on a new property purchase.