Key Things to Know When Buying a Tenant Occupied Property

Purchasing a tenant-occupied property can be an attractive option for real estate investors looking for immediate rental income and a turnkey investment. However, it’s crucial to understand the unique challenges and considerations associated with this type of investment, such as tenant rights, lease agreements, and property management responsibilities. In this article, we will discuss the key things to know when looking to purchase a tenant-occupied multiplex property, by providing valuable insights and guidance to help you make an informed decision.

1. Understand Tenant Rights

Tenant Occupied Property

When purchasing a tenant-occupied property, it’s essential to be aware of the rights and protections afforded to the existing tenants. Tenant rights vary by jurisdiction, so it’s crucial to familiarize yourself with local laws and regulations governing landlord-tenant relationships. Some key tenant rights to consider include:

  • The right to quiet enjoyment: Tenants have the right to enjoy their rented property without interference from the landlord or other tenants.
  • The right to habitability: Landlords are obliged to maintain the property in a habitable condition, ensuring that it meets the basic health and safety principles.
  • The right to privacy: Tenants are entitled to the right for privacy in their leased property, and landlords must provide a sensible notice before entering the premises for inspections, maintenance, or other purposes.
  • The right to security: Landlords are responsible for providing a secure living environment, including functioning locks on doors and windows.

2. Review Lease Agreements

Before purchasing a tenant-occupied property, it’s important to thoroughly review the existing lease agreements. This will help you understand the terms and conditions under which the tenants are currently living, as well as your responsibilities as the new landlord. If you find yourself having difficulties going through the leases, consider hiring a real estate broker to help guide you through the process. Some key aspects of the lease agreements to review include:

  • Lease duration: Determine the length of the lease and when it expires, as this will impact your ability to make changes to the property or adjust rental rates.
  • Rent amount and payment terms: Confirm the current rent amount, payment terms, and any provisions for rent increases.
  • Security deposit: Verify the amount and terms of the security deposit, as well as your obligations regarding its return upon lease termination.
  • Maintenance and repair responsibilities: Understand the division of responsibilities for property maintenance and repairs between the landlord and tenant.
  • Rules and regulations: Familiarize yourself with any property-specific rules and regulations outlined in the lease agreement, such as pet policies, smoking restrictions, and parking guidelines.

3. Assess Property Condition

While it may be challenging to conduct a thorough inspection of a tenant-occupied property, it’s crucial to assess the property’s condition before making a purchase. This will help you identify any potential issues or repairs that may be needed, as well as gauge the overall quality of the property and its management.

Consider hiring a professional property inspector to conduct a comprehensive assessment of the property, including the structural components, electrical systems, plumbing, and heating and cooling systems. Additionally, review any available maintenance records and inquire about any recent upgrades or improvements made to the property.

4. Evaluate Tenant Quality

The quality of the existing tenants can significantly impact your investment’s success, so it’s essential to evaluate their rental history and financial stability. Some factors to consider when evaluating tenant quality include:

  • Payment history: Review the tenants’ payment history to ensure they have a track record of timely rent payments.
  • Employment and income stability: Verify the tenants’ employment and income stability to ensure they can continue to afford the rent.
  • Rental history: Inquire about the tenants’ rental history, including references from previous landlords, to assess their reliability and responsibility as renters.
  • Background checks: Consider conducting background checks, including credit and criminal history checks, to further evaluate the tenants’ suitability.

5. Plan for Property Management

Managing a tenant-occupied property can be time-consuming and challenging, particularly for investors who are new to the process or have multiple properties in their portfolio. Before purchasing a tenant-occupied property, it’s essential to have a plan in place for managing the property, whether that involves hiring a property management company or handling the responsibilities yourself.

When considering property management options, factor in the associated costs, the level of control you desire over the property, and the amount of time you have available to dedicate to property management tasks. A property management company can help alleviate some of the burden by handling tasks such as rent collection, maintenance coordination, and tenant screening. However, this convenience comes at a cost, typically in the form of a monthly fee based on a percentage of the rental income.


Purchasing a tenant-occupied property can offer real estate investors a unique opportunity for immediate rental income and a turnkey investment. However, it’s crucial to be well-informed about the challenges and considerations associated with this type of investment. By understanding tenant rights, reviewing lease agreements, assessing property condition, evaluating tenant quality, and planning for property management, you can make an informed decision and set yourself up for success in your tenant-occupied property investment.


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