BiggerPockets

Hi all! Just wondering what your thoughts are on this. Is it doable? Is it adviseable? I'm about to make an offer-in-spirit (nothing written yet) on several properties, and 2 of them have dead-beat tenants. I want to make an offer on all 5, since they're all paid off and the lady's husband is too old and sick to take care of them. What would be the best course of action? Should I not make offers on the 2 with bad tenants? Should I make the offer but figure in the cost of evicting them + 90 days holding costs? Any advice would be much appreciated! :cool:

Thanks Marcus! I'm thinking that since neither of these folks have paid in months that it may not be an option to keep them. I don't want a bad rap with my buyers. I was just figuring $5000 for an eviction and $2000 for holding costs for the 90 or so days it would take. Sound about right?

To be honest I don't know the first thing about tenant evictions but there have been a few done in my real estate office by agents. I'll see if someone in my office has eviction info and send you an email. It may or may not apply depending on the property state.

I just noticed the offer-in-spirit part. Keep in mind in some states a verbal offer might be considered a binding contract. I'm not sure if that is the case in your state.

Problem tenants are a common component of wholesale deals. You need to learn your state's eviction laws. Search for your state's property code online or contact your local apartment association to find out the exact process. In Texas it costs about $100 and takes 18 days roughly.

I've wholesaled several properies where I do a complimentary eviction for my buyer. Most investors don't want to hassle with it but understanding the process can mean big profits for you.

You never want to keep bad tenants. They don't work out, ever. If they didn't pay the seller, they won't pay you or your buyer.

Well if you don't have access to a couple hundred dollars to get a deal done then I think there's a bigger problem here. Its your personal finances. Making more money won't solve that problem either. You can be broke at any level. Whether you make a $100 a month or $100,000 a month, if you are living above your means you are going to be broke. If you don't change that now, it doesn't matter how much money you make in real estate.

Tell you what, Joseph, if a couple hundred dollars for an eviction is all that stands between you and getting a deal done, I'll personally loan it you when the time comes.

With interest, of course. :D

Thanks Peter! I'll have to see which direction this all goes first. Ryan, I'm not exactly living beyond my means. I've been out of work for a few months. I was starting this business anyway, and at the time I had enough for a meager nest egg and monthly marketing budget, etc.
This is just a temporary situation, I'd just hate to miss out on a deal because of it, especially when it would make such a difference, you know what I mean?

Joe... I would also tell them that all of their back rent is forgiven and that their full security deposit will be returned... and then offer the cash-for-keys.

I bet tenants would be skipping out the door with that and a $500 cash incentive.

And the other cool thing about the security deposit is that you will get that credited to you at closing further reducing the purchase price... kind of like giving away someone elses money.

Man I love this stuff!

If you decide to do the deal make sure you have an exit plan in place. If you can't get the tenants out with the Cash-of-Keys method can you handle not getting rent for three months.

If it does not work it's better to pass up a deal then loss in the end.

Originally posted by Peter Giardini

Joe... I would also tell them that all of their back rent is forgiven and that their full security deposit will be returned... and then offer the cash-for-keys.

I bet tenants would be skipping out the door with that and a $500 cash incentive.

And the other cool thing about the security deposit is that you will get that credited to you at closing further reducing the purchase price... kind of like giving away someone elses money.

Peter, Great Knowledge!!! I will be using this soon! Very soon! Putting it to the test probably this week! Joseph this was an informative thread, thanks! :mrgreen: