Auction Purchase...Evil Tenants= HELP!!

Buying & Selling Real Estate
3yFollow

Auction Purchase...Evil Tenants= HELP!!

Huso Akaratovic
Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

Greetings, 

I purchased a property sight unseen at the court house Auction in Virginia. I went to introduce myself and discovered that the people living there are not the owners. According to the information they gave me, the son in law was the owner of the unit, and of course they are at shock that he did this to them. The unit is in an excellent shape, they lived there for the last 8 years and took great care of the property. The problem is they're only paying $850 per month. I asked if there were any leases in place, and they said no.  When I initially went to introduce myself 2 days ago, they told me they would move out, but were not sure where to go since they were caught off guard. I felt bad for them and told them that they can stay there, but the rent was going to be now $1400, which that's what the market rent is. Today they come back to me and say, you can't make us leave, because we have a lease in place that runs from January-January, and according to the law you have to honor the lease.  He told me that's what his lawyer told him. I asked who the lawyer was and he did not want to disclose that. I'm caught off guard and to inpatient to wait until Monday before I can talk to some attorneys. In the meantime, does anyone have any suggestions or advice? 

0Reply
31 views

Most Popular Reply

Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
3y

The lease, if one truly exists, was not the result of an arms-length transaction. Likely executed within the past few days and backdated. The definition of bona fide tenant/lease also includes reference to market value. Is 60% fair market value? Hardly... the tenants and their lawyer are playing games.

Were I the auction purchaser in such a situation I would leave emotion out of it, give the appropriate notice to quit, and on the first possible day file to evict and obtain possession.

Gimer Law516 Reviews
WebsiteView Page
5Reply
See this reply in the discussion

38 Replies

Jump to latestLatest
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y

    Too much emotion involved.  That’s why I work through third parties.  
    one strategy I’ve used successfully in the past is to have the tenant agree to leave in 60 or 90 days and in exchange forgo all rights as tenants. I collect $500 up front and agree that it will be fully refunded plus an additional $500 if the property suffers no damage during the 60 or 90 days.  This gives them sufficient time to find suitable accommodations that they can afford, and it would take as long to evict (judge likely to give them time to move) and cost of legal fees.  
    If I initially spoke with the tenants my self and they acted abusive I would react by trying to “nail” them and throw them out whatever the cost. By using a third party representing me I am able to maintain a more unbiased posture, allow the emotion to blow off without influencing my decision making process, and hopefully reach an agreed plan which provides them with time to rearrange their lives and me to suffer the least cost.

    Btw, not unusual for a relative not to inform their relative tenants that foreclosure is taking place.  Nobody wants to bring up that discussion and all its consequences, much easier to bury your head in the sand and hope.  We find that in a foreclosure situation the average owner doesn’t really believe the foreclosure will take place until 5 days prior to the foreclosure sale.  

    I’ve often wondered why landlords are held in a “bad light” for investing in property and running their business.  Tenants who don’t pay their rent still regard, as does a whole segment of society, landlords as greedy evil for evicting the non paying tenants.  This is akin to a grocery store owner who provides customers with credit.  He wouldn’t be considered evil for not providing groceries on credit to customers who didn’t pay their balances.  Car companies who won’t provide leases or loans to people who have t paid on their current car aren’t considered evil.  Somehow property owners are supposed to provide housing regardless of whether they get paid or not.  

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Huso Akaratovic:

    @Russell Brazil I know they were caught off guard, and I do feel it for them. It is not my fault that their family member screwed them over. I tried to be proactive, I went to knock on the door the first day I won the bid. That gives them 14 days to make a decision if they want to stay there or move out. I did not have to do that because eviction is nothing new for me, and I buy at auctions all the time and this is already accounted as expense where i might have to evict folks out, and i have done it in the past, but of course i always try the easy route first.  I also was going to let them break the lease whenever, so the $1400 could've been temporary. Plus, he told me wife and him have both good jobs that they have been holding on for 10-15 years and they both work for 2 local reputable employers that pay well. I put in the title evil, because when we touched basis few days later he went off on me and called me bunch of names and started treating me. I guess google research has empowered him to be brave all of sudden and enabled him to  treat me like ****. I just didn't disclose that in my initial post, bc i thought it was not relevant. As far as the doubling the rent part goes, they were leaching off for 8 years at the super low rate, and who knows maybe they didn't pay at all. Perhaps, they are the reason the property foreclosed? we don't know who is right, the tenants or their relative. These days, i could rent me dogs outside house for $850, not to mention a 2br 2 full baths beautiful condo with 1000 sq ft, i could probably get section 8 for 1500-1600. So. yeah screw him. Im not even trying to help anymore. I am good either way, the unit is already paid off.

    keep in mind and not sure this state but most states the attorney or trustee has to POST the property with the foreclosure notice.. So I suspect they knew it was coming.  These are always tough things to go through .. I stopped buying occupied homes at auction years ago just because of this  3 suicide attempts and one successful will kind of dampen your enthusiasm.. not to mention people are nuts these days.. you could go to the door and it could turn physically violent. Just not worth the risk to me anymore.  But what is being said about valid lease is true in most states I have worked in.. but then who knows what a judge will decide. And if it gets that bad you run the real risk of the folks trashing the place on the way out costing you far more money then just letting them stay for a year at 850.00..  I had one where they stripped it to the studs :) 

    PS:  lets look at it monetarily and take out the emotion.  U bought it at auction so you probably paid somewhat under market value and paid cash no doubt.. So the 850 a month is a positive return for you for one year.. 

    U hire the attorney and go through all that jazz and that will cost you ( if you cant saber rattle them out)  I bet 2500 to 3k minimum.  Plus even if you got possession today at least a month or two to turn the unit over and get it re rented.  so 10 times 1400 = 14,000  minus attorney fee's of 3,000 = 11,000.   you keep them in 12 months at 850 and maybe you be a nice guy and just raise it to 1k something that is not so shocking, but lets go with the 850 X 12 = 10,200    ( 11,000) = 800.00 dollars.. you really want to tie up your time and risk destruction of your property over 800.00 or or even if it is 2k.. I have to think 2k to you is nothing money.. and you have not considered running the math on this..  Just sayin.. house is clean they like you give them the year maybe they then can afford..  I know I worked all sorts of deals out with my holdovers over the years and one thing I learned is the damage they can do is not worth a few grand..  Now if they are not paying at all thats a different kettle of fish.  so JUST SAYIN

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    3Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Russell Brazil you know sir. I respect you a lot and always appreciate your feedback and I have learned a lot from you over the years, and I thank you for that. However, there is no need to call me vulgar names. I did nothing  to deserve that from you. I’m not trying to be funny, I simply stated how I felt. Anyways. I will stop there, because I’m here to hear different perspectives. I appreciate everyone’s feedback. 

    0Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Don Konipol Very good perspective and advise. I will def take it in consideration. I appreciate it. 

    0Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Jay Hinrichs Thank you for breaking it down for me. I will not make any decisions until they provide me with the lease. As of now, I have not received it. You def have provided me with a good advice. 

    0Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Dan H. I kept my cool the entire time. I told him I will get back to him once I figure out what he was talking about. I will wait once i receive the lease from him to evaluate the situation one more time. I'm also supposed to be closing on the unit this coming up week. I guess we shall see how this one will play out. I'm very curious where this one will take me.  

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Huso Akaratovic:

    @Jay Hinrichs Thank you for breaking it down for me. I will not make any decisions until they provide me with the lease. As of now, I have not received it. You def have provided me with a good advice. 


    sometimes when U run the math on rental property you find out your stepping over dollars to pick up pennies.. in this case taking on risk for very small dollars. but then again its just contrarian thinking to most landlords that only have one way to do their bizz.. I get both perspectives.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Jay Hinrichs I’m open minded for sure. But I do get carried away just like anyone else. Thats why you I appreciate everyone’s perspectives it definitely keeps the head cool. The goal is to be a good human being and do good business at the same time.:)

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    I agree with others that you are getting too emotionally involved in this.

    You knock on the door and express your position. Occupant has a different opinion and intends to fight you. I fully understand why they are upset and why they would want to continue renting for $850 a month. As a businessman, I would simply start the process of eviction. No emotion. No name calling. No complaints. Control what you can control, get them out, turn it around, rent it for market rate, and move on to the next deal.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    4Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    3y
    Quote from @Huso Akaratovic:

    @Jay Hinrichs Thank you for breaking it down for me. I will not make any decisions until they provide me with the lease. As of now, I have not received it. You def have provided me with a good advice. 

    Reality is they probably don't actually have a lease, so you don't want to just plan on waiting indefinitely.
    1Reply
  • Arsen Atanasovski
    Investor · Rochester, MI · Member since 2017 · 1k+ posts · 584 votes
    3y

    It’s Monday, file the 30 day, courthouse is open for business today :)

    1Reply
  • Patti RobertsonBusiness Member
    Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
    3y

    I am in your market.  1) Give them a 30 day notice and tell them how and where to pay your rent in the meantime.  2) Since they told you there was no lease, go on that assumption. The VRLTA has specific terms out lined for when there is no lease in place.  3) If/when they don't leave, file an Unlawful Detainer for holdover. At the hearing, tell they judge they specifically told you there was no lease.  The Judge will very likely believe your side of the story.  This isn't the first time they have seen this happen.

    757-472-2547
    0Reply
  • Huso Akaratovic
    OP
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    3y

    @Patti Robertson thank you for the advice. The finally produced a bs lease that they of course made up! I’m letting an attorney handle this matter. It’s better if I stay out of it :)


    I’ve heard of your landlord lunch meetings that you host.  I need to make it to one of them one of these months. A friend of mine speak very highly of your meeting. 

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free