Andrew Shader Discusses the Pros and Cons of Buying a Tenant-Occupied Apartment to Use as a Passive Income Source
Purchasing an apartment with tenants has advantages and disadvantages. If you are considering this, make sure you understand what you’re getting into. Andrew Shader, real estate expert and entrepreneur, explains that knowing both the benefits and drawbacks can make it easier for you to make a sound, educated decision.
Purchasing a Tenant-Occupied Apartment
Being the landlord of an investment property is extremely advantageous when you have reliable, trustworthy tenants.
The best tenants will save you costs, stress, and time, whether it pertains to maintaining the property or when it comes to moving out. Good tenants pay their rent reliably and on time, stay for a long duration, and take care of the place.
In addition, purchasing an apartment that already has a tenant provides them with some continuity. They won’t be required to find a new place to live and pack up everything they own after the sale is finalized, which may encourage them to be excellent renters.
If you aren’t planning on living in the apartment, there may be no reason to have the current tenant vacate. You’ll start making passive income right away.
Tenant-Occupied Apartments and Your Risk Tolerance
However, the risk comes into play at the possibility of running into problems with the tenant if you plan to occupy the apartment yourself. They may not pay rent reliably or keep the property in good shape.
Alternatively, they may do all of these things until they are given notice that it’s time for them to go. In many states, a tenant who has lived in an apartment for a certain number of years must be given substantial notice (90 days, for example) if their lease will not be renewed.
If you decide the tenant must vacate, you’ll need to quickly get the process going so that they will legally receive proper notice and ample time.
They may go quietly at the end of the lease term. However, they may not, especially with inflation, rent prices increasing, and housing inventory at historic lows.
You’ll have to enter an eviction battle that could cost you thousands of dollars and a lot of time and stress in the worst-case scenario. However, the best-case scenario is that the tenant provides you with reliable, steady passive income until they leave quietly at the agreed-upon date.
Working with an Experienced Professional like Andrew Shader
An experienced real estate professional will be able to help you limit your risk and choose a property that may have the best chance of being everything you had hoped for.
Andrew Shader is a real estate investor and developer in the Ft. Lauderdale area. He has built an impressive portfolio during his career that stems from his strategy of purchasing value-added properties, then investing in them to bring them up to fair market value.
With a background in business, accounting, insurance, and more, he founded his real estate business in 2016 and is now a leading Ft. Lauderdale real estate entrepreneur.
