Thinking of buying a property with tenants? Short answer: Yes, there are risks. But with the right steps, these risks can be managed. In some cases, it might even be more attractive than buying an empty property. But of course, it depends on the situation. The scenario is different if you are an investor versus if you plan to live in the property. Let's discuss both. First, let's start with the most critical question.
If You Plan to Live in It, the Risk Is High
Let me give you a clear answer: If you are buying your first home and there is a tenant, I'd be remiss not to tell you to turn back while you can. The Turkish Code of Obligations (Türk Borçlar Kanunu) protects the tenant. Even if you file an eviction lawsuit based on personal need (ihtiyaç tahliyesi davası), the court process takes at least 6 months, often up to a year.
Moreover, you risk having to pay the tenant compensation equivalent to one year's rent at the end of the case. Especially if the tenant has a young child, the court process drags on even longer. Judges can be more inclined to rule in favor of the tenant. The whole process of the evicted tenant finding a new home and moving can take up to two years. That's why I say, if you are going to live in the property, look for an empty one.
If You're Buying as an Investment: The Flip Side
Now for the good news. If you are an investor and your goal is to generate steady rental income, buying a tenanted property can be a golden opportunity. You avoid the rental loss that comes from waiting to find a tenant. Your money starts working for you immediately.
But there is a trap: an old rent. If the tenant has been living there for a long time, the rent they pay may be well below market rates. For instance, if a property in Caddebostan yields 15,000 TL in rent while a similar property on the same street rents for 30,000 TL, there is a problem. In this case, the return on your property is lower. Fortunately, as the new owner, you have the right to file a rent determination lawsuit (kira tespit davası). But going to court is cumbersome.
Instead, try speaking with the tenant before the purchase and agree on a figure close to the market rent. Suppose the rent is 10,000 TL and the market is 20,000 TL. You agree on 15,000 TL. The tenant isn't put in a difficult spot, and you increase your income. Such an agreement benefits everyone.
Questions to Ask the Seller and the Tenant
There are three critical steps not to miss during the sales process. If you skip them, you may face trouble down the line.
- Ask for the rental contract. When does it end? How much is the deposit? Are payments regular?
- Check on the deposit. In most sales, the deposit stays with the seller. Make sure it is stipulated in the contract that the deposit is transferred to you.
- Meet the tenant. Have the seller introduce you. Observe their satisfaction with the property and payment habits. A good tenant adds value to the property.
Does an Eviction Commitment Really Protect You?
The seller might sometimes say, "The tenant has already given an eviction commitment, you won't have any trouble." Is that true? Partially. If there is an eviction commitment (tahliye taahhüdü) taken at the beginning of the rental agreement and it is undated, it is generally considered invalid. The Court of Cassation (Yargıtay) has rulings on this.
If the commitment is notarized and contains a clear date, your job is easier. Still, do not rely on this commitment without consulting a lawyer. Because if the tenant objects, the court process may start anew, opening the door to additional costs for you. Therefore, the wisest course is to have all legal documents examined by an expert before the title deed transfer.
As we frequently state as editors of SahibindenSat, the greatest risk in real estate is uninformed investment. Buying a property with tenants offers opportunities but requires attention. It is beneficial to discuss every step with a professional.
Frequently Asked Questions
When can the rent be increased when buying a tenanted property?
It depends on the increase clause in the contract. Generally, it is increased once a year, in line with the CPI (Consumer Price Index). If you wish, you can file a lawsuit to have the benchmark rent determined.
What if the tenant doesn't allow me to view the property?
The seller has an obligation here. If the tenant prevents you from exercising your right to view the property, it could be a sign of future problems. Reconsider your purchase decision.