Offer accepted, but I have a question or two. Please help!

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Found a property on the MLS in a desirable neighborhood, with great schools. It's part of an estate sale and has a second smaller property on the same land that has a tenet on a month to month lease. The house needs to be updated, but looks like it is in good shape for how old it is. I plan to make it a live in flip, as I'm currently renting and by moving in will greatly lower my monthly expenses while earning a little on the side from the cottage.

What paperwork do I need to be done to make sure that everything with the tenet is in order, ie deposits etc? Can I give him a new lease to sign and raise the rent? He is currently on a month to month lease at $350 a month, which is so far below market it might as well be free. Would you use the same lawyer for that as the lawyer that is doing the closing? I’ve never taken over a property with a tenet in it, and I don’t know what I don’t know and don’t want to get bit in the *** later, so I appreciate any and all advice! Thanks!

The key when you buy a property with a tenant in place is to get everything BEFORE the seller gets the money.  You need the following:

1. Last lease even if it is expired because that is what the mtm terms are on.

2. Ledger

3. Deposit and prorated rent (if any) paid out to you on the HUD

4. Keys

If the tenant is on a lease or month to month you need to review the original agreement if possible.  You need to give a full 30 days notice to the tenant  (your state may be more).  I am in Nashville, TN.  You can give them notice that you either want them to move, you are raising rent, and/or you want them on a new lease.

You can write this all up if you are comfortable or see if the closing attorney will do it or hire someone.  There are probably forms for it on here or online as well.

Be careful with a rental that has a legacy tenant! (tenet is something else entirely.) Before signing a contract, get the lease & perform your due diligence. This could be risky unless you meet the person & determine their ability to sign a 12 month lease & pay market rate. If you decide to buy this property, send a certified letter offering the renter specific options and requiring an immediate response. Seller should also provide info on this tenant and reason for the low rent. Ask a lot of questions, take notes, and listen carefully. You should probably consider terminating the tenant & start fresh with a new renter. I saw a 4plex that I liked until the seller told me I can "never raise the rent on one of the tenants" (relative or something). I walked/ran immediately. Who needs the aggro. Also, most attorneys offer a no cost first meeting. You might get some answers. Always work with a real estate attorney on these types of issues.

@Jane S.

Thanks for the advice and also correcting my typo! ;)

I hadn’t thought of the certified letter, that’s a smart idea. I just spoke to the real estate attorney today and told him the entire situation and he is going to gather all the legal paperwork and speak to the sellers attorney about the lease, deposits etc.

I do know that the family selling knows very little about both the property and the tenant, since it’s an estate sale and the owner is passed away. So far all I know is it was a month to month lease, he only pays $350/month, and helped the elderly lady with lawn care and errands (although the lawn looks overgrown in areas so he didn’t do a good job).

I agree kicking him out and getting a new tenant may be the best idea.