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Is this a good idea? On the surface it sounds like it is however as always an astute investor will weigh up the pros and cons of such a move. Firstly and most importantly the obvious advantage of such a purchase is that the property is tax deductible and receiving rent from day one. A rental property cannot be claimed as a deduction until the first tenant is in place after sometimes many dollars having to be spent including the first clean to get the property ready to be tenanted. Lastly, knowing the history of the tenant and the condition of the property, one can make an informed decision if the current tenant is looking after the property.
The downside of course is if the property has not been looked after, how long will it take to evict the current tenant? Are their repairs or improvements that need to be done as these are much harder to organize if a tenant is in situ? A lease that is soon to expire can also be a problem as the current tenant might move out leaving you short on expected cash flow and back at square one.
Therefore, as always due diligence is required not only on the purchase of your property but whether to purchase one tenanted.
Some points to keep in mind if your prospective purchase is currently tenanted.