You want to make a real estate investment and an opportunity is offered to you: an apartment already rented. What are the specificities of this type of acquisition and its advantages? We will explain everything to you!
Investing in already rented accommodation: what are the specificities?
When you buy a rented apartment, the lease is transmitted when the authentic deed is signed. You then become the lessor at the same time as the owner.
As a new landlord, you are required by law to abide by the terms of the rental agreement signed by the previous landlord, just as the tenant retains his obligations.
What happens in the event of a lease takeover?
- The tenant remains in place;
- The amount of rent does not change;
- The obligations of the lessee’s guarantor are transferred to the new lessor.
What are the advantages of buying an already rented property?
When you buy pre-rented properties in Noida, your land income is immediate. The rents received can in particular cover all or part of the monthly mortgage payment contracted to finance the acquisition. The presence of a current rental lease is also a strong argument for obtaining a mortgage.
The known and proven profitability of the operation tends to reassure the lender. A situation which also avoids you having to market your property and quickly select a solvent and serious tenant to avoid rental shortfall!
In case of lease takeover: what about the security deposit?
The question of the security deposit paid by the tenant at the time of signing the lease must be settled by the notary in charge of the sale.
The draft authentic act may stipulate that the seller pays the sum in question to the purchaser at the time of the final signature or not. Whatever the decision taken by the parties, the new owner-lessor must return this deposit upon departure of the tenant under the conditions provided for by law.
Buying an already rented apartment seems a good solution for a rental investor who thus saves himself the search for a first tenant. But be careful to take all the necessary precautions.
BUYING RENTED ACCOMMODATION: SAVING TIME AND MONEY
Buying pre-rented properties in Gurgaon can be an opportunity for rental investors. There is already a tenant in place and with a history, known rental profitability for an established period. There will be no vacancy of the housing after purchase for the buyer.
Investing in a rented apartment also allows you to save money, with a purchase discount of 5% to 15% compared to an empty home. The price difference is all the more interesting for a large area and an empty rental.
Last advantage: obtaining a loan can be made easier! The bank takes into account the immediate rental income generated by your future property, for the simulation of your loan.
THE RENTAL CONTRACT: A CRITERION OF CHOICE FOR THE PURCHASE OF A RENTED ACCOMMODATION
If the purchase of a rented apartment is attractive, the characteristics of the lease should however be carefully studied before starting.
What are the current rental conditions? You will not be able to renegotiate the contract during the lease, so it is better to carefully study the conditions: rent level, revision conditions, presence or not of a termination clause in the event of non-payment.
How long is the lease to run? If there is less than 6 months of empty rental lease, and 3 months in furnished rental, and the seller has not notified the tenant to leave, the contract will be automatically renewed for 1 to 3 years.
Is the property furnished or empty? If it is furnished, you become responsible for the maintenance and replacement of the furniture appearing in the inventory.
OTHER PRECAUTIONS TO TAKE WHEN BUYING A RENTAL PROPERTY
It is important to check the tenant’s history by asking for rent receipts and agency management report. A clause on the absence of payment incidents may be added to the deed of sale.
The condition of the property is also important. Although the security deposit is transferred to you, if the tenant’s inventory of fixtures indicates that the accommodation is in poor condition, you cannot charge him for the repair costs.
Also check the surroundings of the property: a future nearby construction site can scare your tenants away, while a metro project can retain them over time.