@William Henze I'm curious to hear other responses from more experienced folks, but I did something similar and bought a duplex in Tennessee from a bank that was occupied. I think Tennessee is comparatively landlord friendly though. I did extremely conservative estimates as if I would have to replace all plumbing, HVAC, electrical, etc. This may not be an option for you, but I got contact information for one occupant (who gave me the other contact info) and I reached out to the people prior to purchase during my inspection period to feel them out. Also, I've bought 2 different properties "As Is" where I still did my inspection and went back to the seller with concessions that I got. Basically I tried to get a little creative on the due diligence, because the bank wasn't too much help. In this case, I was able to piece together enough to get comfortable with the risk. It would concern me if they can't or won't given you any kind of information at all, but perhaps that's normal.
My takeaway though is that people are much more unpredictable than repairs. I didn't think it would be difficult to get everyone out, but there were 4 people living on one side all of whom I had to get out separately. It took me about 7 months to get everyone out. Much of that was just me being too flexible, but if I were doing it again, I would probably offer more cash for keys from day 1. Its so hard to feel like you're paying people for being crappy tenants, but it would have been worth it in the long run just for my own sanity.
Good luck on the endeavor!
@William Henze we just purchased a property with the same scenario. Its was relatively painless. We have also had issues where the occupant filed for BK and they were able to stay for 1 year and it cost us 10k in attorney fees to get them out. It would be prudent to get inside if at all possible but I understand in such instances its probably not possible.
The one we bought recently was listed on the MLS and we were able to see at least some pictures of the inside so we knew a little bit about the condition.
@William Henze I know it's uncomfortable to buy a property without being being able to see the inside or do your inspections. That's why you get the discount because you're willing to take the risk. The fact that someone's actually living in the property is a pretty good indicator that the place is livable on some level with running water and power, although there's no guarantee. I would budget for doing a complete cosmetic rehab: interior and exterior paint, replace all flooring, new appliances, light fixtures and fans. Depending on the neighborhood, you might be able to get away with painting kitchen cabinets and replacing countertops. If not, budget for new kitchens and bathrooms. Unless the property is really old, I wouldn't budget for a repipe or new electrical wiring. Will this be a rental or a flip? Rental rehabs tend to be less costly than flip rehabs
@William Henze In 2011-2013, I purchased about 2 dozen lower end condos at the the trustee sales. At the beginning, I door knocked every potential property that I was going to bid on so that I could talk my way inside and take a look to gauge the interior condition. By the end of our buying run, I was buying the condos sight unseen.
We held these as rentals and did not over rehab them, just did what we had to and that was better than most of the rest of the neighborhoods. The most we spent on one of the rehabs was about $15k. That condo was partially rehabbed by the previous DIY owner and had unfinished projects all over the condo that had to be completely redone. Some condos didn't require any rehab and the existing, cooperating tenants were more than happy to start paying us when we started fixing their condo up. We had a variety of different situations: vacant and good condition, vacant and trashed, occupied in good condition with good tenants, occupants that were uncooperative and required eviction, the whole gamut. Average rehab was about $5500 including evictions. When you have numbers and a long term outlook, it helps absorb the occasional short term loss.