Quick question, i'm looking at a house in my market that needs a decent amount of work. Its currently occupied and the rent being charged is way lower than comparable houses in the area. What do you do? Stay away from this or buy it and immediately raise rents so current tenants will leave (because it looks like they've trashed it), rehab and an then get the higher rents? if the rent stays as is, its not a good deal because the mortgage isn't even covered. thanks!
You would need 60 days notice to get rid of the tenants if they are on a month to month lease, at that point rehab and get it done. Raising the rents is just a meaner way of accomplishing the same thing in my opinion because you would be asking them to pay the higher rent for a property that isn't in a condition to justify the higher rent.
And remember, they may be on a year (or more?) lease. The lease goes with the house so you’re on the hook to abide by it.
There are ways to convince them to leave early, but then you’re also running a risk of them saying no.
Many people include delivering the house empty as part of their offer to the seller. But it may lengthen the closing (since they have to give 60 days), and is more work for the seller.
They probably won't pay the higher rent with the same place. You need to get them out and rehab. Check the lease if it's month to month or not. Maybe cash for keys is the solution.
My main concern would be an eviction situation. If they don't want to leave then you need to be prepared for a 3 month eviction process and reserves to cover the expenses during that time.
Sounds like a great value-add opportunity if you can make it work!