Is it unethical to (legally) kick out good tenants?

South Bend, IN · Member since 2016 · 50 posts · 6 votes

I'm using an FHA loan to purchase a small multifamily as a primary residence. I have found a property that is currently 100% leased to month to month tenants. I am buying a property as my primary residence and know that I have to occupy the residence within 60 days of purchase. Is it unethical to buy a property and legally kick otherwise decent tenants out to occupy the residence?

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Jacob Rhein

Lawyer/Investor · Atlanta, GA · Member since 2017 · 33 posts · 34 votes

The property is yours. Just make sure you respect them by giving reasonable notice to vacate. They should understand, especially if they have been renting month to month.

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Jacob Rhein
Lawyer/Investor · Atlanta, GA · Member since 2017 · 33 posts · 34 votes
8y
The property is yours. Just make sure you respect them by giving reasonable notice to vacate. They should understand, especially if they have been renting month to month.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
It makes no difference whether a tenant is good or bad. Based on your rights and a tenants lease you can do what every you choose.
Ethics does not enter the equation.
On the other hand it would be unethical for a tenant to refuse to leave a rented property when asked to do so by the property owner.
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Peter Sinclair
Duarte, CA · Member since 2015 · 65 posts · 54 votes
8y
It would be unethical if you feel what you’re doing is wrong and unjust.
1 Reply
Ray Lai
Investor / Vendor · San Diego, CA · Member since 2016 · 1k+ posts · 949 votes
8y
@Darius Lipsey
It's definitely not unethical if you give them a nice heads up. Before you kick them out though, this is a multifamily unit and you only need to inhabit one of the units. Could you occupy one of the other units to keep the 'best' tenants of the bunch?
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Jack P.
Columbus, GA · Member since 2017 · 88 posts · 115 votes
8y
A lease is a contract between two parties. Once the terms of the contract expire, it is up to both parties to agree to renew the contract. As a landlord, its no different for you to end the terms of the contract as it is for them. If the tenants wanted the guarantee that they wouldn't be asked to leave, they could sign a long term contract. In this case, they didn't, so it would be no different than if they unexpectedly gave their notice to vacate.
That being said, I'd pick a unit based on the financials, and have their vacation as terms of the sale. As mentioned above, your only requirement is to be a decent human being, and follow the law.
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Cara Lonsdale
Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
8y
It may not make you feel good, but there is nothing unethical about it. If they are on a month to month, then they should expect that a notice could come at any time. That same flexibility that they enjoy goes both ways.
Just make sure that your contract stipulates ONLY a 30 day notice. Many contracts stipulate a 60 day notice to vacate, even though the terms are month to month. So be clear on that.
Also, make sure to account for any eviction time if they don't move out. That can add another month.
I would ask the Seller to give them notice during your escrow period, so that the clock has started as early as possible.
In terms of selecting, what will you choose? Best place that meets your needs? Lowest rental rate? Tenant who has been there the least amount of time? Just curious how you will choose who to boot.
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
8y
It is a risk they take as renters. Dont feel bad, they could have purchased it too. Especially month to month tenants should be expectiong some canges
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Justin Carpenter
Investor · Carlisle, IA · Member since 2017 · 9 posts · 7 votes
8y
I had the same issue with our first multi-family purchase. We needed to kick one of the tenants out so we could move in. Because I communicated with them they understood my position and everything went smoothly. If they are month to month they know that either tenant or landlord can put in a 30 day notice at anytime, and because of that it would not be unethical.
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Phil G.
Real Estate Broker · MA · Member since 2013 · 361 posts · 297 votes
8y
Not unethical. Personally, if I would voluntarily give them as much time over the 30 days, after i close, as I could. And promptly help them out with a reference, if called upon.
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Darius Lipsey
OP
South Bend, IN · Member since 2016 · 50 posts · 6 votes
8y
@Jacob Rhein @Thomas S.@Peter Sinclair @Ray Lai @Jack P. @Cara Lonsdale @Colleen F. @Justin Carpenter @Phil G.
I make the call on which tenant leaves. I think at this point I may choose to live in the unit that needs the most work first unless there is a huge difference in quality of tenant. I'm so grateful for BP. Other investors here have been a huge help in putting my emotions at ease. Thanks
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Alex K.
Investor · Atlanta, GA · Member since 2015 · 17 posts · 15 votes
8y
Why don’t you ask them to sign a term lease if they are good tenants? Maybe you offer a concession if they’ll stay as vacancy is literally the worst. If not, can you get a long term tenant now/at closing? Otherwise table the longer lease until Feb/Mar. I’ve MTM tenants now but what’s the point of not collecting rent? Losses?
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Zach Shrader
Shelbyville, IN · Member since 2017 · 28 posts · 4 votes
8y
So if I can wanted to do a house hack on let’s say a duplex but it is fully occupied and the tenants both have long term leases, then I can’t break those leases and I will not be able to House hack this property? Correct?
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Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
8y
@Zach Shrader,
That is correct unless they voluntarily leave, you pay them to leave etc. Also if the duplex has 2 tenants with long term leases you will not be able to get financing that requires you to owner occupy (FHA/USDA/VA)
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Darius Lipsey
OP
South Bend, IN · Member since 2016 · 50 posts · 6 votes
8y
Alex K. I plan to occupy one of the units for a few years at least and owner occupancy is also a requirement for FHA/VA loans. Ideally other good tenants would qualify and sign a long term lease.
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Cheryl Butler
Professional · Delaware, OH · Member since 2017 · 52 posts · 39 votes
8y
It is not unethical for month to month tenants to legally give notice, move out, and leave you with a vacant unit, so why would you perceive that you are doing something unethical by not renewing them, provided you give them required notice per their original Lease?
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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y
It's not unethical at all. You own the property, and you can do what you like with it, within the law.
What sucks is when here in LA you can buy a property but not be allowed to kick someone out of a unit without paying them $19,300 in "tenant relocation assistance."
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Darius Lipsey
OP
South Bend, IN · Member since 2016 · 50 posts · 6 votes
8y
@Cheryl Butler I talked myself into being overly emotional. I was really starting to feel bad about the idea of putting someone out of a space that they’ve made feel like their home. I know legally there isn’t anything wrong with it, but from a personal standpoint this is a level of confrontation I’ve been hesitant to deal.
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Cheryl Butler
Professional · Delaware, OH · Member since 2017 · 52 posts · 39 votes
8y
@Darius Lipsey Listen to BiggerPockets Podcast #179 to learn about confrontation....so funny and great advice!
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Matt P.
Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
8y
You could always put in your purchase contract that one unit needs to be delivered empty at the time of close and put it on the seller if your not comfortable with getting them out.
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