Expert Insights on buying Rental Property with tenants
Why Mentorship Matters for New Real Estate Agents
Today, we're diving into one of my favorite topics: what to consider when buying a rental property that already has tenants in place. It might seem ideal—built-in income, no marketing needed—but it also comes with a unique set of challenges. Let’s break it down!
1. Review Existing Leases Before You Buy
It sounds obvious, but many buyers overlook this during the rush of making an offer. Make it a point to review all existing leases and rental agreements as part of your due diligence—either before you go under contract or written into your contingencies.
You’ll want to understand:
Lease start and end dates
Rental amounts
Renewal and termination clauses
Pet policies, deposits, and late fees
Any special conditions the current landlord has agreed to
This information helps you avoid surprises, ensures smooth ownership transfer, and supports your financial planning.
2. Know the Local Landlord-Tenant Laws
Tenant rights and landlord obligations vary greatly by state and even by city. In Central Oregon, for example, rules around eviction, notice periods, and rent increases are very specific—and not always landlord-friendly.
If you're managing properties yourself (like Suzanne and I often do), educate yourself thoroughly. Otherwise, hiring a qualified property manager is a smart way to stay compliant and reduce legal risk.
3. Communicate With Tenants Early and Clearly
Once you’re past contingencies, make sure to initiate communication with the tenants before closing, if possible. This builds trust and eases the transition.
At a minimum, provide a Change of Management notice. This should include:
New contact info for repairs or questions
Changes to lease terms (if applicable and legal)
Expectations for urgent vs. non-urgent maintenance
Clear communication goes a long way in avoiding friction and misunderstandings.
4. Talk to the Tenants – They’ll Tell You a Lot
One of the best ways to assess a property’s true condition is to talk to the people living there. We encourage buyers to attend inspections and walk-throughs when tenants are present.
Not only will you learn about the building’s condition, but also:
How well the tenants maintain their units
Their communication style
Potential red flags that might not show up on paper
Remember, you’re not just buying a building—you’re inheriting the current tenant relationships, too.
5. Analyze the Rental Income and Expenses
Before you even make an offer, review:
Rent rolls
Lease terms
Maintenance records
Landlord-paid utilities
Taxes, insurance, and other recurring costs
Compare that data to your down payment and financing terms to determine whether the property actually cash flows. In markets like Central Oregon, appreciation may be stronger than immediate cash flow, so it’s crucial to plan accordingly—especially if you’ll need to raise rents gradually to match inflation.
6. Understand the Tenants' History
Ask the seller or property manager about:
Rent payment consistency
Maintenance requests
General tenant behavior
Are they reliable and self-sufficient? Or are they constantly calling for minor issues like tightening screws or repainting cabinets? Some tenants are low-maintenance dream renters. Others may create more work than they’re worth.
Knowing who you’re inheriting helps you decide whether the property—and its people—are the right fit for your investing goals.
7. Plan for Rent Increases and Renovations
Owning rentals means budgeting for capital expenses and planning for regular maintenance. Many multi-family properties on the market today show signs of deferred maintenance—roofs that need replacing, outdated appliances, or peeling paint.
Don't be that landlord. Plan for:
Annual rent increases (within legal limits)
Appliance replacements
HVAC servicing
Interior painting between tenants
Safety inspections and upgrades If you're acquiring a property with substantial deferred maintenance, understand your rights around temporary evictions for repairs and renovations. Just make sure any decisions comply with local landlord-tenant law—and talk to a real estate attorney if needed.