What to include in an offer for occupied property?

Question

I'm making an offer on an occupied duplex in the Tampa, Florida region. I've bought empty property and primary residences before, but this is my first offer on an occupied property to buy-and-hold. What things should I ask for/about which I may not think of?

One tenant has been there seven years and is Month-to-Month and the other has been there three months and is on a one-year lease.

Things I will ask for:

1) Tenants' Contract / Lease Agreements

2) Rent Roll Receipts

3) Transfer over any deposit + accrued interest

4) Extended inspection period (I wasn't able to walk through one side of the duplex due to the tenant not responding to the seller/agent/door knock day of).

5) Transfer any pre-paid rents

Should I ask for:

6) Should I ask them to sign the Month-to-Month tenant to a new one-year lease?

7) I want the tenants to pay through Cozy or another online platform (haven't decided on which yet). Should I ask that to be included now or just wait until I close?

Any other things which should be included?

Thanks for your suggestions!

ASV

Andrew Varney · Answer

@Joshua Rountree

Thanks! I'll try to drop you a message. I am out of the country for the next week and a half, so I scheduled the inspection for the 24th and will talk to the tenants then. It's a ways out, but I included an extra long inspection period in case anything critical comes up then, I'll still have more than a week to back out.

Cheers!

ASV

Aaron T. · Answer

good luck. occupied properties can swing both ways. 1. it could work out if the tenants want to stay, or 2. a bad situation if you want to get in there to fix up the properties to increase the rents. your 7 yr tenant will not take kindly to change.

why is the owner selling? to cash out? bad tenant situation? moving on with life? etc?

let us know how it works out.

Joshua Rountree · Answer

Hey @Andrew Varney

I would try to talk to the tenant as much as I could before closing. Let me know about the situation as much as you are comfortable sharing. I bought a tenant occupied property and thought the tenant would stay after I closed but instead decided to leave and not answer my phone calls in the process. Try to understand what they think about every thing and if they plan on staying based on new ownership. How quickly you plan on rehabbing it depends on when they decide to leave.

Hope this helps! Good luck!

Andrew Varney · Answer

Thanks Aaron T.

The seller moved from Sarasota to Texas and doesn't want to manage @ a distance; at least that is the story as I know it :-). I thought about and agree on the challenge with fixing it up with existing tenants; it should cashflow $250-300 once closed at the current rents, which I'll be ok with for now until they move out. Unless they become problem tenants, I'd rather deal with the slightly lower rents (maybe $50-75/unit) than turnover for the near future.

There was also a recent flip a few homes down which sold for a large margin over my offer - I don't plan to flip/sell, but its good to know there may be margin for forced appreciation.

ASV