The Pros and Cons of Buying a Renter-Occupied Condo
For real estate investors looking for immediate cash in Thailand, buying a condo with a tenant may seem ideal. After all, it saves you the time, money and stress of finding a new tenant. However, buying a tenant-occupied condo in Thailand has both advantages and disadvantages. If you’re not careful, you could end up buying an expensive issue from the seller. That’s why it’s essential to weigh the risks against the benefits and make sure you fully understand the implications.
Before buying a tenant-occupied home Investment propertyhere are some pros and cons to consider.
Benefits of Buying a Renter-Occupied Condo
1. No need to find new tenants
Find a tenant for your condo in Thailand can be a long and expensive process. This is especially true for foreigners who are just starting to invest in real estate in Thailand. The rental process in the country can be a bit confusing for many people as there is no set standard. However, buying a condo that already has tenants saves you time and effort by not having to find new ones yourself. Plus, you have some time to prepare even if current tenants leave when their lease expires.
2. Get instant cash flow
When you close a tenant-occupied condo, you can start receiving rental payments right after the property closes. A disadvantage of owning a rental condo is that if the property remains vacant, there will be no rental income to help cover the mortgage. With condos that already have tenants, you don’t have to worry about that right away. You may even end up with extra income after covering mortgage payments and other expenses.
3. Code Compliant Condo
Another convenience of buying a condo that already has tenants is that it already meets all legal requirements. Property owners in Thailand must meet the legal requirements set by local law. Thailand currently does not have landlord-tenant regulations or a system that regulates this need. The laws governing this area are therefore, at best, ad hoc, with contract law offering the best protection for both parties to the agreement. Landlords usually hold some legal superiority in contractual agreements, but they usually make the contract as fair as possible.
Nevertheless, it is a good idea to familiarize yourself with the general laws of Thailand regarding landlords and tenants. Also, make sure you fully understand the contract between the current owners and tenants before buying the property.
4. No additional investment needed
Buying a condo with tenants in Thailand means no additional investment is involved. You don’t have to worry about renovating the condo since it’s already furnished and rented. Thus, it is a lucrative opportunity for those on a tight budget.
Disadvantages of Buying a Renter-Occupied Condo
1. The rental conditions must be respected
It is crucial to remember that a lease is a property right attached to the condo and not to the owner of the condo. So buying a condo with existing leases means you must continue to honor those lease terms. Depending on how the previous lease terms were constructed, this might not be favorable to you as a new landlord. This could be difficult for you as the landlord because the previous landlord did not draft the lease in a manner beneficial to the landlord. Be sure to review all rental terms before purchasing the property.
2. Complicated and expensive process to evict a bad tenant
If you need to evict a tenant, the process can be complicated and expensive. Keep in mind that you can’t evict tenants just because you bought the condo with the intention of living in it. You will have to wait until their lease ends. Be sure to follow all applicable rules that require tenants to be notified when their leases will not be renewed.
3. Legacy legal risk
One of the risks of buying a tenant-occupied condo in Thailand is the possibility that the condo may not comply with local laws. When you buy a condo in the country, you are responsible for anything in it that doesn’t meet legal requirements. Therefore, you need to do your due diligence and do a thorough inspection of the property. You should also ensure that the previous owners have met all legal requirements for buying property in Thailand. In addition, you will also have a legal responsibility towards the tenants. If the previous owner did not fulfill his responsibility, you could suffer the consequences.
4. Problematic tenants
Not all tenants are good, and having bad tenants as soon as you buy a condominium in thailand can be difficult. Some tenants may be late paying their rent each month, while others may damage your condo. If you don’t want to deal with difficult tenants, review the tenants’ payment history and credit reports before buying the condo.
If you decide to go ahead with the purchase of a tenant-occupied condo, it is essential that you do thorough research and due diligence to ensure it is a wise investment. .
Ready to buy a tenant-occupied condo in Thailand? Be sure to check out the best listings through Thaiger Property!