Hi,
I am trying to buy a rental investment property. Currently among various properties I have seen one that looks nice. However the property does not have any renter currently in any of the two units. I am wondering whether buying such unit without any renter will be a good decision. Since this is my first property investment I do not want it to go sour. Is ther any way to know if the home will rent after the pruchase? Thanks for your advise in advance.
Provide some more info so that we can accurately help answer the question. What condition is it in, move-in ready or a rehab? What type of area is the property in, a warzone or the burbs?
Would the location of the duplex make it unrentable? if not, with proper advertising there shouldn’t be any reason that you can’t rent it out, especially considering the strong rental market that most areas of the country are currently experiencing. The properties that I buy rarely have people in them, and the price and condition of the building reflects that. Also, if you buy a house with nobody in it YOU can select the tenants, rather than inheriting someone else’s problems.
Thanks Jake. The location seems to be decent, the duplex looks rental OK and the condition seems not too bad. What is the guarantee that the duplex will be rented (% wise with proper ad).
If you are willing to hold the property indefinitely, you can be 100% certain that with the proper marketing you will eventually find a renter at a price consistent with the comparable rents for the neighborhood and the condition of the property.
When evaluating rental property, it is wise to talk to property managers and owners of nearby rentals, talk to agents too and find out how rentable the area is. You may be able to find out some good insight on where to market, vacancy rates, find other opportunities and even property managers. The more people you talk to, the more information you will have to make a good informed business decision. Best of luck!!
Thanks everyone for the nice advises. I appreciate it.
You can make an offer with a clause to terminate within 30 or 60 days and a clause allowing you to show the property to clients. Invest in an ad and see if you can get tenants lined up prior to your closing on your contract.
With tenants already lined up, the decision becomes easier as to whether or not to buy.
Personally, I like properties with more units than 2. Mobile home parks and small apartment buildings are usually lower cost per unit. The more units in a property, the less significant one vacancy would be. In a duplex, one vacancy is 50%. In a 12 unit mobile home park, one vacancy is 8%…you can still pay your mortgage payments with 8% vacancy!
The best use for duplexes (in my humble opinion) are rooming houses. In Georgia, you can have up to 4 unrelated people in each dwelling. A duplex allows you to rent out up to 8 rooms. Although you are ‘using up the property’ faster, that could be $800/week income. About 45% -55% of your cash flow is profit. In this case, higher profit requires higher management…just another option to consider.
Hope this helps.
Rob in Atlanta