The short answer: a tenant in place settles vacancy but leaves rent open. On one purchase, a lease at $650 a week was replaced at $740 once it ended. Buying tenanted gives up market rent for the rest of the lease in return for income from settlement and fewer competing buyers, so cost the lease before you offer.
A tenant in place settles vacancy, not rent
I’m a buyers agent. In August 2025 I bought a property for a client with a tenant paying $650 a week. By early 2026 the same property was leased at $740.
Nothing about the property changed in between. The lease ended.
I treat a tenant in place as half an answer. A lease is a term of the deal with a dollar value, and it belongs in the price you offer.
What you inherit when you buy tenanted
You take on a rent and an end date that someone else agreed. On that purchase the rent sat a little below our estimate of market rent, and the lease had about five months to run.
The end date did most of the work. A small gap for five months was a cost the client could see and accept before we offered. Stretch the same gap over 18 months and it becomes a different conversation.
How and when rent can change during or after a lease depends on the state, so ask a local property manager before you offer.
You also inherit a tenant you did not choose. The rent ledger and condition reports are part of the due diligence for that reason.
What you take on when you buy vacant
You set the rent at the current market and you pick the tenant. Trades can get in before anyone moves in.
The cost is that you fund the property until a lease is signed, and until then the rent in your numbers is an estimate. Vacant homes also draw owner occupiers, so expect more competition.
How to cost a lease before you offer
Take the market rent for a comparable property and subtract the lease rent. Multiply the weekly gap by the weeks left on the lease. That figure is what the lease costs you.
Then set it against the alternative, which is the weeks without rent and the letting costs that come with buying vacant.
How a lease can create negotiating room
On that purchase the lease did two things for the client. It narrowed the field to investors, because an owner occupier could not move in at settlement. And it set the basis for our offer.
We priced on the $650 in place and left the expected uplift out of our numbers. That gave the client a lower starting position than a market rent case would have, with fewer buyers competing.
The client gave up market rent for five months. In return they bought at a price built on the lower rent and had income from settlement.
It will not always land. A seller holding other offers has no reason to move.
What went right, and what not to plan around
The tenant gave notice, we advertised before they moved out, and the new lease followed without a gap. The new rent also came in above our estimate. Part of the difference was the lease gap we had costed. The rest was the rental market giving us more than we had allowed for.
Neither was in the numbers behind the offer, and I would not build a purchase on either.
Who each option suits
Buying tenanted suits someone who can carry the gap for the term and values income from settlement. If your numbers need market rent early and you can fund some weeks without income, vacant may fit better.
The lease is part of the price. Cost it before you offer.
Which side of that trade does your next purchase need?
Frequently asked questions
Is it better to buy an investment property tenanted or vacant?
It depends on your numbers. Tenanted suits someone who can carry any gap to market rent for the rest of the lease and values income from settlement. Vacant may fit better if you need market rent early and can fund some weeks without income.
How do you work out what an existing lease costs?
Take the market rent for a comparable property, subtract the lease rent, and multiply the weekly gap by the weeks left on the lease. Compare that figure with the weeks without rent and the letting costs of buying vacant.
Can you increase the rent after buying a tenanted property?
How and when rent can change during or after a lease depends on the state. Ask a local property manager before you offer.
If you want a structured framework for making your next property decision, the free 10-day email series covers each decision in order.
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Disclaimer: The information in this article is general in nature and does not take into account your personal objectives, financial situation, or needs. It is not financial, legal, or tax advice. The Nelis Group accepts no liability for actions taken based on this content. You should seek independent advice from a relevant licensed professional before making any decisions and always confirm the latest rules and thresholds with your state revenue office or relevant authority.