Considerations for Buying a Former Rental

House For RentFormer rental homes often sell for less than owner-occupied homes and can sometimes be a great deal for buyers. However, there are reasons these properties can bring in less than top dollar.  Below we’ll discuss a couple considerations to keep in mind before choosing this path.

Why is the property selling now?

This answer can be fairly harmless – maybe the owner burned out on managing the property, or became tired of dealing with off-hour calls and responding to complaints. Or maybe the owners is moving and simply wants to cash in.

However, sometimes the answer is less than desirable.  Perhaps it’s a cash flow issue – if a tenant hasn’t paid the rent, the owner maybe struggling to cover the mortgage. Sometimes the owner cannot afford to make the repairs the house requires.

Why does the reasoning even matter? It matters because it could indicate how well the property was cared for and whether or not the owner is motivated and willing to negotiate. A cash-strapped owner may be less inclined to maintain the property. And since the owner hasn’t lived there, he or she may not even be aware of any problems.

Wear and Tear

Even if the previous owner performed regular maintenance and frequently visited the property, the tenants may not have cared for the property like a homeowner would. Make sure you get a complete property inspection, and it’s not a bad idea to request past inspection reports as well.

If the house shows signs of extra wear and tear, factor fixes into your budget. You might consider asking the seller for repairs or credit you money toward closing costs. Remember, it’s not a great deal if you’ll have to spend more on repairs than you’d pay for another, comparable home that’s in better shape.

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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