Whether a property is occupied or vacant often factors into your decision-making process when searching for investment properties, but a home occupied by tenants is never a deal breaker.
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If you find an occupied foreclosure or bank-owned property you can hope to buy it for much less than the vacant alternative. And with a little TLC, you can build equity and earn a significant return on your investment. Think about the upside: If the home is occupied by responsible or long-term tenants, then this is your big opportunity to become a successful landlord and generate cash flow.
Regarding your potential tenants, any lease that’s in place before you buy the home remains in effect after the purchase, so you cannot raise the rent or evict a tenant before the end of the lease.
Things to Know When Buying an Occupied House at Auction
If you want to flip the property with tenants in it – or if the home is occupied by former owners who refuse to leave – then you may need to hire a real estate attorney. The situation is slightly more complicated but manageable with the proper tools and resources.
To that end, eviction laws vary by state and violating them can be costly, so it pays to do your research on state regulations. In California, for instance, the eviction process can take 90 days or longer. You can also start your journey on the cost to evict relative to what you would be charging for rent with a cost to evict calculator.
Keep in mind, you cannot legally enter a foreclosure property if it’s occupied, though you can park nearby and check out the outside, the yard, the architecture, nearby retail stores and local schools. Also, do your research about the surrounding neighborhood, especially if you plan to inhabit the house that you buy at auction.
To the savvy investor buying an occupied house at auction, the fact that it is occupied would not be a deterrent if they carry out the necessary due diligence and know the applicable eviction laws.
Auction.com has more than 13,000 listings of foreclosure and bank-owned properties, and we add new properties all the time in all 50 states and Puerto Rico.
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