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investment property
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rental property
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neighbors
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Why Should I Buy An Established Investment Property?
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Why Should I Buy An Established Investment Property?

What are the reasons one would buy an established investment property? Isn't that going to cost me more? Is this a common practice? These are all good questions that can only be answered by you. There are pros and cons to buying an established investment property. We will take a look at the answers to these questions below.

So what exactly is an established investment property? There could be a couple of different answers to this question. From the honest stand point, it would be a property that currently has renters and is making a profit. This would be the ideal definition, and it would be the answer to most of the investors out there. Unfortunately, not everyone is an "Honest Abe" though. For someone looking to unload a problem property, they might define it as a property that has been rented at one time, or could be rented in the future. If you suspect that you might be dealing with a shady character, go to the property and ask the neighbors about the tenants. Make sure that there is someone living there, and for how long they have been living there. The neighbors will usually be upfront and honest, its in their best interest to make their street a better place to live too.

If I buy an established investment property, isn't that going to cost me more? It may, depending on how much the asking price is and how long you intend to keep the property. Let's say you purchase the established investment property for $100K, have no repairs, and already have tenants paying $500/mo. And, for example, there is another property for $80K, it needs $20K in repairs, and no tenants. Its pretty obvious that the first house is going to be worth the extra money because it already has money coming into your pocket. A rental property that needs work done before you can put tenants in it causes more stress and worrying than the one that already has tenants in it.

Is buying an established investment property a common practice? Honestly, it normally isn't common. People that own a piece of investment property that already have tenants living in it usually do not want to get rid of it. Two of the hardest parts of investment properties is the initial repairs to make it habitable, and getting tenants in it. Real estate investors do not usually find these kind of deals unless the seller is in a financial hardship, or they are retiring. Usually if these investment properties are already established, the buyer will normally pay more for them. Deciding how much more to pay for these types of properties is a decision only you can make.

I hope this has helped you in deciding whether or not to buy an established investment property. Whatever you decide, talk to your team of trusted advisers, and do your research on- and off-line.


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