Some apartments for sale in New York City come with a tenant already living in them. This may sound like a hassle, but it could also be a bargain. Here are some pros and cons of buying an apartment with a tenant in place.
What is an apartment with a tenant in place?
An apartment with a tenant in place is one that has a renter occupying the space at the time of sale. The renter may have a lease agreement with the current owner, or may be a rent-stabilized or rent-controlled tenant with legal protections. The buyer of the apartment becomes the new landlord of the tenant, and must honor the terms of the lease or the rent regulation laws.
Why would you buy an apartment with a tenant in place?
One of the main reasons to buy an apartment with a tenant in place is the price. These apartments are usually cheaper than similar units without tenants, because they have less demand and more restrictions. The buyer may be able to negotiate a lower price with the seller, who may be eager to sell the property and avoid the hassle of dealing with the tenant.
Another reason to buy an apartment with a tenant in place is the income. The buyer can collect rent from the tenant until the lease expires or the tenant moves out. The rent may cover some or all of the mortgage payments, taxes, and maintenance fees. The buyer may also benefit from tax deductions for rental income and expenses.
What are the drawbacks of buying an apartment with a tenant in place?
One of the major drawbacks of buying an apartment with a tenant in place is the uncertainty. The buyer may not know when or if the tenant will move out, and may not be able to move in themselves or rent the apartment to someone else. The buyer may also have to deal with legal issues, such as eviction procedures, rent disputes, or tenant complaints.
Another drawback of buying an apartment with a tenant in place is the condition. The buyer may not be able to inspect the apartment thoroughly before buying it, and may find out later that the apartment has damages or defects that need repairs. The buyer may also have to abide by the tenant’s preferences, such as the color of the walls, the type of furniture, or the presence of pets.
How to buy an apartment with a tenant in place?
Buying an apartment with a tenant in place requires careful research and due diligence. The buyer should check the tenant’s lease agreement, rent history, credit score, and background. The buyer should also consult a lawyer and a broker who are experienced in tenant-related laws and transactions. The buyer should also have some funds in escrow until the tenant vacates the apartment, to ensure that the apartment is in good condition and ready for occupancy.
Buying an apartment with a tenant in place is not for everyone, but it could be a smart investment for some buyers who are willing to take the risk and wait for the reward. These buyers should weigh the pros and cons of this option, and be prepared for the challenges and opportunities that come with it.
