Real estate speculation is when you purchase real estate with the expectation that you'll be able to sell that property for a profit, usually within a relatively short time frame. Obviously, there is risk of a loss in this, which is why many landlords choose to rent for some time before advertising a certain home for sale. If you have a property you wish to sell because you feel you can make significant gains, but currently have tenants, there are certain things you must know and do to ensure you aren't infringing upon your tenant's rights.

Are You a Speculator?
Well, this really depends on what definition you consider correct. Many consider speculation to be "flipping" homes, which is true; but a good portion of folks who engage in real estate speculation hold onto to properties for longer than one year, suggesting that real estate speculation is about waiting for a timely moment to sell, rather than trying to "flip". Moreover, the line between investment and speculation is often crossed. Many landlords own properties for years before they sell, treating the property as an investment. In general, real estate speculators target properties with high profit potential and stick to the old adage of buy low, sell high. Being able to sell high usually relies on observing the market, making updates to the home, and knowing what buyers want.
Overall, there are four stages of the real estate speculation process:

  • Acquisition
  • Renovation
  • Management
  • Sale

Regardless of whether you consider yourself an investor or speculator, if you have tenants living in the home, you must be careful not to violate their rights if you want to sell the place.

Dealing with Tenants When You Want to Sell
First and foremost, you want to be honest with tenants and you want to make sure that they know their rights. This may require that you look up local laws regarding this, as many areas are different. Time is important for property flippers. They need the property renovated, the old tenants out, and the property refilled and rented quickly. Some people within this group are responsible for the most egregious tenant harassment. If you are looking to purchase a fixer-upper to remodel and rent, it is important to remain ethical, even when dealing with a time crunch.

Unethical Tactics To Avoid

  • Mismanagement may occur when property management teams take over with the sole purpose of getting old tenants out.
  • Changing locks on entrance doors, and forcing tenants to bring ID to their offices to get new keys. Some landlords will use this tactic to use the information that the ID provides to run a background checks, in the hopes of finding new methods of harassment. Harassment of tenants should always be avoided.
  • Shutting off utilities without notice. Once off, tenants are without these services for long periods of time.
  • Placing inexperienced work crews in place 24/7, surrounding tenants with constant noise, dust, and severe interior structural damage. This may make their living place uninhabitable and will not provide a peaceful place for them to live.

Flipping an Investment Without Violating Rights
It is possible to make a profit on a property without violating the rights of the people who live there. Obviously the seller has little control over the property once it has been acquired by a buyer; but as the current landlord and property owner, you can ensure you treat your tenants ethically during the selling and acquisition process.


POSTED August 05 2015 10:05 AM

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