Former 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.