The worst deal I almost made in fifteen years of landlording wasn’t about the building at all. It was about the tenant already living in it. I was three weeks from closing on a small apartment building when the seller finally handed over the rent ledger, and it showed the tenant had been late on payment nine times in the previous two years, with one stretch of four months unpaid before a partial settlement. I still bought the property, but I knocked 6% off the price and budgeted for an eviction I ended up not needing. That experience changed how I evaluate every occupied property I look at now.
Tenant history is data the seller usually has and rarely volunteers unless you ask directly. Most agents will hand you a rent roll with a single current-status column and hope you don’t ask for more. Here is what I actually dig into before I sign anything on a property that already has someone living in it, and why each item matters more than people expect.
Payment records, not just current status
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A seller telling you the tenant is current on rent today tells you almost nothing about the eleven months before that. I ask for the full ledger going back at least 24 months, ideally 36. I’m counting three things: how many times rent arrived after the 5th of the month, how many times it arrived after the 20th, and whether there was ever a formal notice sent. One or two late payments in two years is normal life; people get busy, bank transfers get delayed. Five or more is a pattern, and I price that risk into my offer, usually somewhere between 3% and 8% of the purchase price depending on severity. On one building I bought in 2021, the discount I negotiated over a shaky payment history ended up covering nearly two full months of the vacancy loss I had budgeted for, and I never even needed it.
Length of tenancy and renewal behavior
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In Japan, a tenant who has renewed the same two-year lease three or four times in a row is telling you something valuable: they treat the unit like home and they’re not shopping around every spring. I’ve had tenants stay past the 10-year mark, and those units cost me almost nothing in vacancy or turnover repairs over that whole stretch, maybe 50,000 yen total in minor touch-ups. Compare that to a unit that’s changed hands every single lease term for six years straight, which usually means four or five separate move-out cleanings and repaintings. That pattern tells me something about the unit, the building, or the surrounding area is pushing people out faster than it should, and I want to know which before I buy rather than after.
What the previous landlord or manager actually says
If a property management company has been running the building, I call them directly rather than relying on the seller’s one-paragraph summary. I ask about noise complaints, unpaid utility disputes, and whether the tenant has ever damaged common areas like the bike storage or the mailbox area. I got burned once by skipping this step on my third property purchase; the tenant turned out to have three prior noise complaints from neighbors that never made it into any written record I saw beforehand. A five-minute phone call would have surfaced that instantly, and it’s a call I now make on every single occupied purchase, no exceptions.
Condition of the unit during past inspections
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Most professionally managed buildings do a walk-through once a year or at each lease renewal. I ask to see those reports going back as far as they exist. A unit that’s been reported in good condition at every check tells me the tenant is careful with the space. A unit with recurring notes about smoking damage, pet damage beyond what the deposit covers, or unapproved DIY modifications like shelving drilled straight into load-bearing walls is a unit I’ll want to inspect myself before closing, floor by floor if I have to, even if that adds a week to the timeline.
Deposit and key-money history
I also check how the original shikikin (security deposit) and reikin (key money, if any) were handled, and whether any of the deposit has already been drawn down for repairs or unpaid rent. If a 100,000 yen deposit has already been reduced to under 30,000 yen because of prior issues, that’s effectively an unfunded liability I’m inheriting on day one, and I negotiate the purchase price accordingly. I’ve walked away from two otherwise decent deals purely because the seller couldn’t produce a clear accounting of where the deposit money had gone.
My quick checklist before making an offer
- Full rent ledger for at least the past 24 to 36 months, not just a current-status summary
- Number of late payments and how many days late each one was
- Total years the current tenant has occupied the unit and number of lease renewals
- Direct contact with the property manager or previous landlord, not just the seller’s account
- Most recent unit inspection or walk-through report, and how many are on file
- Remaining balance on the security deposit after any prior deductions
None of this guarantees a trouble-free tenant, but it turns a guess into an informed bet. On the properties where I skipped this homework early in my career, I paid for it later in lost rent or repair costs that easily outran what a discount up front would have covered. On the ones where I did the digging, even the occasional late payment rarely turned into a real problem down the line. That’s the approach I use across all 9 of my properties, and it’s the first thing I check before I even think about the roof or the plumbing.
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