For Sale by owner with tenets

5 Replies

I am looking at a 2 bedroom home in a nice neighborhood that is  for sale by owner.  I just spoke to the seller on the phone and he told me, " he just wants out, they always pay late and I'm done with it".  He wants to put the money into his business.  My question is, if I purchase the home how do i get rid of his current tenets?  The reasons i would want to get rid of them is, well they don't pay on time, he is getting $400 per month and I think it could rent for $600 per month.  I would need to do renos. but i haven't seen the inside yet.  I asked him what the condition was on the inside and he said it is good for a rental but to live in it would need everything, again i haven't seen inside.   Let me know your thoughts, thanks in advance.  --Jon 

Well first you need to see the inside so you can determine if it's worth investing in, and at what price.

Second, either these are good tenants or bad tenants.  If they are good tenants, there must be a reason why they're not paying.  If they're bad tenants then you just need to get rid of them, or have the place vacant upon purchase as a condition of the sale.

Dawn Anastasi, Core Properties, LLC | http://www.coreprop.biz | Podcast Guest on Show #29

@Dawn Anastasi  That is great advise!  I would add that I would go meet the tenants and see the inside at the same time.  If you need to get rid of them, my best outcomes have come from just talking to tenants and negotiating their move out.  I always try for a win-win and have in mind what I am wiling to give.  Maybe you are going to do rehab anyway and could be generous with the deposit.  Maybe your time frame for getting in what with financing and closing allows for some no-rent time for them which won't cost you anything when they agree to move.

@Jon Adams  

I once had an attorney who handled evictions tell me that on his personal rentals he just paid problem tenants to leave.  He would go stand on the porch with $500 and tell them he would trade it for the keys when they were out.  He said it was cheaper then an eviction even though he could do the legal work himself.  I have rarely had truly bad tenants and have never yet had to pay any to leave, but that mindset as a backdrop for negotiations has been useful to me.

Great! Thanks to all!!!

Keep in mind that if there is a lease in place then it transfers with the sale.  It doesn't just get cancelled, so make sure you get a copy of it.  Also, I'd have the tenants complete an estoppel certificate so there's no confusion about any agreements they may or may not have with their current landlord.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you