Buying real estate is a fantastic way to get a return on your investment, whether you’re hoping to make income right away through renting a property out or are planning to hold on to it for a while and sell it down the road.
Among the various decisions you’ll need to make when choosing a property, you’ll need to look at the pros and cons of purchasing occupied vs. vacant properties.
Occupied vs. Vacant
What makes a vacant home or building more attractive to some buyers? First, vacancy affects value. A home that’s not being lived in or a building with apartments that can’t be rented smacks of desperation, often making it a good deal for investors. A sale price comparison of occupied vs. vacant properties reveals that when a place is being lived in or rented out, the seller is in a much better position to negotiate a higher price.
For some potential landlords, vacancy means starting from scratch. They might not be purchasing a building with built-in tenants, but they’re also not purchasing a former landlord’s problems, whether it’s renters who consistently pay late or ones who generate constant complaints due to noise violations or other rule-breaking. Finding your own tenants means being able to screen for candidates that will help make your job as landlord easier.
Why Investors Look for Occupied Properties
On the flip side, occupied homes and properties relieve a lot of the concerns that come with buying a structure that’s vacant. First and foremost: a home that’s been sitting empty often come with a list of problems. Some of those issues may be apparent upon an initial walkthrough: vandals may have entered the home in order to damage or steal things such as copper wiring or appliances.
Other problems won’t be apparent until an inspection has occurred. Vacant homes often suffer from deferred maintenance or neglect, either because they’ve been sitting for so long or because the previous owners lacked the funds to keep the property in good shape.
Vacant apartment buildings suffer from the same issues, but here, the concern is one greater. Why is the building vacant? Is it in an undesirable neighborhood? Is the structure and its units riddled with pests and problems? Did the previous landlord mismanage things to the point that the building now has a bad reputation that will be tough to shake off?
Because of these problems, what initially appears to be a steal can be a real estate deal full of potential pitfalls. This is why many real estate investors are shrugging off the entire occupied vs. vacant debate and simply going turnkey.
The Benefits of Turnkey Properties
When you purchase a turnkey property, it’s updated and ready to go on day one. Often, these properties are already being rented. If you research and plan carefully, you can find an excellent property with a reliable tenant that will generate passive rental income as soon as the deal closes.
To simplify matters, it helps to work with an experienced turnkey investment firm. They’ll help you find the best turnkey real estate properties to suit your budget and your goals. In addition to working with a firm to help you find a good investment, talk to them about property management. With someone to manage the property, oversee maintenance, and communicate with tenants, you won’t have to become a full-time landlord in order to make money off of your investment.
The bottom line: While there are pros and cons on each side of the great occupied vs. vacant debate, if you’re ready to hit the ground running and begin bringing in money from your investment right away, you can’t go wrong with an occupied turnkey property.