Existing Tenants Should They Stay or Should They Go.

7 Replies

I am a newbie and am under contract for a FourPlex.  

The inspection revealed a dirty tenant that apparently has a good rental history.  I am wondering if I should insist that he be evicted and the unit be returned to a rentable condition before I agree to finalize the purchase.  I am withing the inspection period.

I have recieved excellend advice from a previous forum post.  Thank you in advance.

Nick

Originally posted by @Nick Vorves :

I am a newbie and am under contract for a FourPlex.  

The inspection revealed a dirty tenant that apparently has a good rental history.  I am wondering if I should insist that he be evicted and the unit be returned to a rentable condition before I agree to finalize the purchase.  I am withing the inspection period.

I have recieved excellend advice from a previous forum post.  Thank you in advance.

Nick

 You can ask for whatever you want but one question is will the seller be willing to accommodate?

After you get through that I don't think it makes any sense to evict a tenant for being "dirty" if they are paying on time. With well over 800 rentals in my portfolio I can tell you that your not going to be collecting very much rent if you evict all of the "dirty" tenants. The ones who keep the place very tidy are definitely the minority. It does of course matter what asset class you are in as well. As the asset class rises as does how clean the tenants keep their units.

I don't see why a seller will agree to (and pay for) evict a tenant that is paying on time. When you put the property under contract you probably had time to view all the units and then make an offer you felt comfortable with. 

As you know, when you buy a property with existing tenants you also but the leases. If you want to get rid of the "dirty" tenant, just wait for their lease to expire and do not renew it. Easier and cheaper than filing an eviction (probably faster too, depending where the property is located)

Thank you for your advice.  I decided to keep the tenant.  

When inheriting tenants, I always have the tenants fill out an estoppel agreement before closing.  Which is a simple questionnaire that has the tenant describe what they believe to be any current arrangements and outstanding maintenance items.  Like rent, security deposit, lawn care, snow removal... compare this information to the actual leases and what the seller says.  Keep the estoppel in your tenant file, you may need it if the inherited tenant starts making claims after you take ownership.  Saved my butt big time.

Oh, my other thought on inheriting a dirty tenant...  if they are paying at least close to market rent and have already dirtied the place, leave them be.  Save your remodeling cost and vacancy costs and keep collecting their checks.  There is no guarantee the next tenant will be any better, they may be dirtier and not pay rent at all.

I have inherited heavy smokers, but they have already been smoking in the unit for years.  I leave them be, the damage is done and they always pay on time.  Once they move out I'll have to clean, paint, carpet... and then I will enforce no smoking with the new tenants... but I've had the smokers for over a year and they've been very reasonable.

It really depends on your definition of "dirty".

I would keep the tenant initially and simply non renew at the end of their lease if the "dirt" is a issue in regards to whether it is damaging the unit.

Once you get established improving your tenant base is fairly simple and a normal process in investing in rentals. Many inherited tenants ultimately will need to be replaced to reach your personal goals.

The definition of "dirty" is varied.

I don't interfere unless they are causing damage to the property, creating problems for the neighbors or community, or attracting pests. I also have to consider what would happen if they just moved out without cleaning and whether I could turn the unit around with their deposit or if the expenses would exceed what I have.

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