With spring up ahead, many people living in cramped apartments are yearning for a house with a yard.
For many wannabe buyers, the catch, of course, is financial. How can first-timers get an excellent price on a solid property? Steve Israel, the president of a real estate firm that caters to homebuyers, says one strategy is to consider properties that were once rental units but are now up for sale.
He says some of the most willing-to-negotiate sellers include those who had to move due to a job change. These are people who moved before their property sold and decided to rent their place out on a temporary basis.
“They never intended to become landlords and dislike the headaches,” Israel says.
Here are few pointers for buyers pondering the purchase of a rental:
1. Visit the property when the renters are absent.
With a few rare exceptions, those living in a rental home are usually displeased upon learning that their landlord plans to sell and force them to move.
You’ll also feel a lot more comfortable scrutinizing the property. For example, you won’t be embarrassed to open the closet doors or kitchen cabinets.
2. Realize that a detailed home inspection is a must.
A fair number of rental properties are overseen by professional management firms. Still, they rarely receive the same level of attention as owner-occupied homes. That’s why it’s important to make any bid conditional on a satisfactory home inspection.
As a real estate investor, said Sid Davis, a broker and author of “A Survival Guide for Buying a Home.” Davis once owned seven rental properties, all of which he’s since sold. His experience as a landlord taught him that tenants often fail to tell their landlord about problems unless they become serious.
3. Distinguish between houses with superficial vs. serious issues.
In those neighborhoods where available homes are still in short supply and buyers continue to outnumber sellers, bargain properties are now tough to find. Even so, Davis says those who keep an open mind about purchasing a rental unit could still get a good house for an under-market price.
“Lots of folks attach a stigma to buying a rental. So if you’re the people who can look beyond that stigma … you could score a very good deal,” he says.
The key to finding a genuine bargain in a rental unit is to carefully consider each property on its own upsides and downsides.
“The reality is that some rental properties – especially those that have been occupied by tenants for five years or longer – are a terrible deal that would drain your savings and make your life miserable. But a house that’s been rented out only briefly could present you with a wonderful buying opportunity,” Davis says.