New York City · Member since 2023 · 11 posts · 7 votes
I would like to make an offer for a multi-family home in Queens, NY. The home has one tenant that is not cooperating and is being evicted.
How much lower can I go on the offer price due to the tenant? What are some strategies to make this more favorable? I've read that I can potentially ask the seller to pay the eviction fees, renovation costs, etc. until the tenant leaves.
Other strategies I've read is to have the seller pay the lost rental income until the tenant leaves.
The challenge is you don't actually know the cost. If the tenant decides to be difficult, this could take literally years before they get out.
Here is a potential strategy (I have not used it yet):
Make the purchase contingent on the tenant moving out prior to the close of escrow. Once all contingencies are released on your end, have your earnest money deposit released early to the Seller so they can use the money to buy the tenant out. Sometimes the issue is the Seller doesn't have the money. Now they would.
For 99% of my clients, I don't recommend they buy a property with bad tenants in place for this very reason.
I think it's best to offer and bake into account the extra costs. From there it's negotiating. If the seller is firm or not realistic move on. Start at your lower end offer wise to give wiggle room when going back and forth
As a buyer I’d wait until that tenant is out of his unit, especially in NY or CA. As a seller I’d want you to put up 2-3 months worth of rent as a non-refundable deposit. (So you don’t get me to evict the tenant then walk away or try to re-trade the price.)
I would like to make an offer for a multi-family home in Queens, NY. The home has one tenant that is not cooperating and is being evicted.
How much lower can I go on the offer price due to the tenant? What are some strategies to make this more favorable? I've read that I can potentially ask the seller to pay the eviction fees, renovation costs, etc. until the tenant leaves.
Other strategies I've read is to have the seller pay the lost rental income until the tenant leaves.
Anything other ideas? Thanks!
I’m going to take a slightly different approach here. I would talk to a lawyer first because the terms of the eviction could vary wildly depending on circumstances.
For example, if the current owners have cashed any of the current tenants rent checks during the eviction period that can effectively turn the clock back to zero on the timeline.
If the tenant is disabled or a senior, that can make it extra challenging, especially if the building is not free market (ie rent stabilized).
Remember: It’s not just lost rent, you may need to tap a lawyer to help with the eviction proceedings if the tenant takes you to court and those fees are often more than the lost rent.
Once you have an idea of the complexity of this, I’d suggest just counter-offering to the seller based on subtracting a conservative estimate of the cost of this process and be prepared to handle it yourself rather than trying to extract a judgement of some kind from the seller down the road.
The challenge is you don't actually know the cost. If the tenant decides to be difficult, this could take literally years before they get out.
Here is a potential strategy (I have not used it yet):
Make the purchase contingent on the tenant moving out prior to the close of escrow. Once all contingencies are released on your end, have your earnest money deposit released early to the Seller so they can use the money to buy the tenant out. Sometimes the issue is the Seller doesn't have the money. Now they would.
For 99% of my clients, I don't recommend they buy a property with bad tenants in place for this very reason.
Hey Dennis, we negotiated on our buyer's behalf in a similar transaction in Brooklyn. We requested the seller to put money in escrow to cover all potential legal fees as well as rent loss while the tenant is being evicted.
Let's say the eviction lawyer can give an estimate on what the legal fees are and how long it'll take to evict the tenant (rent payment x number of months). Total amount must be kept in escrow after closing and not to be released to the seller unless there is some remaining amount by the time the tenant is evicted or moved out.
Your attorney should be able to advise the best reasonable but protective strategy.
You can usually go 10–20% below asking if there’s a non-cooperative tenant, depending on how far along the eviction is. If it’s early-stage or no court date yet, aim closer to 20%.
Ask the seller to cover eviction costs, lost rent, and possible repairs with credits or escrow at closing. You can also push for a rent-back or escrow to cover the vacant unit until it’s rentable.
If they want a higher price, tell them to deliver the unit vacant. Otherwise, you’re taking on the risk, and the price should reflect that.