Inspection yesterday found cockroaches - advice?

10 Replies

We put an offer on a 4 plex. It meets the 2% rule, has a great cap, all units are rented and honestly needs minimal work (although it has great potential to increase rent with a few upgrades as its in an up and coming neighborhood). When we initially looked at it there is one unit where we were less than pleased with the way the tenants were keeping the place - garbage every where, pets and pee, etc but ultimately we decided it wasn't a deal breaker and when we got the opportunity, we'd raise the rent enough to make it worth it to keep them and we wouldn't be sad if they left. 

Fast forward to the inspection and the unit had visible cockroaches (albeit not a ton, but I know what they say if you see them in the day time... ). We're writing an addendum to the inspection clause that requires the seller to treat that unit as well as pay for an inspection on the other 3 units, and treat them if necessary. That said, its clearly a cleanliness issue that caused them in the first place so how do I deal with the tenant? 

Did some reading here and saw some great ideas like letting them know if the infestation returns its at their expense, but with it being a 4 plex I don't want them to let it go untreated and cause issues for other tenants as well. Would you tell the current owner to evict them? They do have a lease and the tenant has been there 4 years. I don't want to delay closing if I dont have to but also don't want to cause more issues/expense than necessary down the road. Would love to hear how others would handle. 

It's not a deal breaker in the slightest. Find a reason to evict tenant on day 1 (because if they are living with cockroaches they aren't worth much in the first place) and no amount of "you need to keep this place clean" letters is going to cure the problem, and no amount of poison will kill roaches that are attracted to the rubbish which is the food source.

Then treat the place yourself with some good chemicals from your local pest place, and do that once a month for a couple of months. It'll take 5-10 mins to spray each apartment, and maybe 10 minutes to lay roach bait in each apartment. Cost of the chemicals is probably less than $50. You only need to lay bait once.

Whatever you do, do not get the bait on your hands. It absorbs really quickly through the skin, and you'll feel like crap for the rest of the day once you've got past the dizziness, disorientation, and the need to throw up.

Go to www.doityourselfpestcontrol.com. Or call a professional exterminator. Either way they are easy to get rid of.

Thanks for the reassurance. This will be our first eviction. Any resources on what's involved? I presume we have to wait until after closing until we notify them but anything we can do now to prep for it? does it matter that they have a lease in place?

Was it a home inspection, or a specific pest inspection?  Because with such a situation you might also be looking at bedbug.    Get that pest inspection, and then ask the seller for the cost of a years service.

It was a home inspection where the roaches were visible. We've already submitted an inspection addendum that asks him to cover the cost to treat the unit they were found and requiring a pest inspection of the other 3 units, and treatment if needed. 

I don't buy places without signs of pest problems.  Those are great deal makers.

When I rank problems with properties I am looking to buy, active **** roaches gets about the same consideration as a worn out mailbox that needs replaced.

One recommendation.....with multifamily or any structure with shared walls etc....treat the whole place.  Just treating the bad unit will flush the nasties to safe harbor in the units that have not been treated and then you will have your good tenants mad at you.

Since those nasty tenants have already done their damage but are still willing to live there...you might as well collect as much rent as you can before you decide to force them out.  Once you do, you will have some decent rehab expense for that unit.  Even though they are not desirable tenants, they are already there and paying rent.  Might be better than a vacant unit that needs $8,000 in rehab day one.  Might consider keeping them until dead of winter or so....assuming they don't have active lease....then push them out to allow rehab during dead winter months when those pests are less active anyway, get the rehab done and have a nice clean unit ready to go come prime Spring season.

Originally posted by @Ashly B. :

It was a home inspection where the roaches were visible. We've already submitted an inspection addendum that asks him to cover the cost to treat the unit they were found and requiring a pest inspection of the other 3 units, and treatment if needed. 

 Yes, but you need to have the same unit inspected for pests, and treatment plans are ineffective as a single treatment, it often takes multiple treatments (as has been noted already) to remove the issue. Especially if it is because of the cleanliness of the tenant.

@Ashly B. boy if cochroaches are the biggest issue with the inspeciton you are in a very good spot. If the residents are filthy then have the seller evict them but if you think it can be salavaged and they pay rent then I'd just have them give a notice to clean up their act. If it happens again then fine and if again then evict. 

Secondary question. The units are all functional and able to be rented as is but our ultimate goal is to make them a little trendier and try to attract more of a young professional crowd since the place is 5 minutes to downtown in an up and coming neighborhood. Before I knew about the roaches, we had planned to keep all the tenants for 6 months to recoup some of our down payment money and let the rent pay for the renovations, starting with the unit that ended up having the infestation because we knew it was dirty and they have dogs that were peeing everywhere, etc. The rest we would just  upgrade as they turned over. 

So now that we feel we need to get them out right away, would you dive right in and do some upgrades to maximize rents or should we do a good cleaning, get it rented for a year and pocket some income before updating? I know this is a bit vague... some estimated numbers for comparison sake. 

Current rent on that unit: $525 (Tenant has been there 4 years and its way under market for a 2 br 800 sq ft unit)

Estimated market rent: $600-650

Estimated market rent with updated kitchen and bath: $850-950

Estimated cost of upgrades: $4k - ROI 10-14 months

Thanks for any thoughts. I don't want to make the mistake of dumping too much in too soon.

ETA: The updates wouldn't take more than a month and the other 3 units will cover the expenses of the house. 

Originally posted by @Ashly B. :

Secondary question. The units are all functional and able to be rented as is but our ultimate goal is to make them a little trendier and try to attract more of a young professional crowd since the place is 5 minutes to downtown in an up and coming neighborhood. Before I knew about the roaches, we had planned to keep all the tenants for 6 months to recoup some of our down payment money and let the rent pay for the renovations, starting with the unit that ended up having the infestation because we knew it was dirty and they have dogs that were peeing everywhere, etc. The rest we would just  upgrade as they turned over. 

So now that we feel we need to get them out right away, would you dive right in and do some upgrades to maximize rents or should we do a good cleaning, get it rented for a year and pocket some income before updating? I know this is a bit vague... some estimated numbers for comparison sake. 

Current rent on that unit: $525 (Tenant has been there 4 years and its way under market for a 2 br 800 sq ft unit)

Estimated market rent: $600-650

Estimated market rent with updated kitchen and bath: $850-950

Estimated cost of upgrades: $4k - ROI 10-14 months

Thanks for any thoughts. I don't want to make the mistake of dumping too much in too soon.

ETA: The updates wouldn't take more than a month and the other 3 units will cover the expenses of the house. 

 Ashly, 

You're right, there's definitely a lot to think about here. In my personal opinion, if you are going to evict the tenant anyways I say go for the upgrade while you're at it. If you are planning on updating the units, might as well do this one first to test your assumptions. Plus, since you're dealing with all the logistical hassles of the eviction/tenant problems, might as well give yourself the upside of a better tenant and better rent. These young professionals tend to network a lot among themselves as well, so updating the unit right away may create some buzz for the future. All the best!

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