Buying Rental Property: What Does “As Is” Really Mean?

By E-Renter Tenant Screening
Posted on July 30, 2010 under Landlord Tips | Be the First to Comment

When a property is advertised to be sold “as is,” it can mean a great bargain, or a barrel full of trouble. But is the “as is” designation always a deal-breaker?

Not to many savvy rental property investors. “As is” simply means the sellers don’t guarantee the property’s condition and won’t be making any repairs. It doesn’t always mean that something is wrong with the property.

Sometimes there is nothing wrong—the sellers just aren’t up for extended negotiations over replacing gutter straps and repairing a chip in the trim paint. “As is” could also mean the sellers just don’t have any cash to make repairs, or they need every penny of the proceeds of the sale.

It’s perfectly acceptable to ask the seller’s agent why the property is being sold “as is.” Then, when you know, you can decide whether or not to continue with your due diligence. Of course, major defects must be disclosed, like leaking pipes, a bad roof or drainage problems. If the sellers elect not to provide the disclosure, that’s a bad sign.

If you decide to go ahead with an offer, it should be contingent on giving you plenty of time to conduct professional inspections for mold and insects, as well as a general home inspection. If the inspections reveal any major issues, you can still walk away. If small problems are exposed, it’s okay to ask the sellers to cover the repair expenses. They might not, but you never know.

While “as is” homes are a gamble, they are certainly not something rental property buyers should exclude from consideration in every case. Ask your fellow landlords about their experiences, get advice from trusted advisors, and proceed with caution!