Since this is my first post I'll give some background on myself. I'm a government employee with one rental and a primary residence. My wife is a Nurse and is kinda shy on the subject of rentals. She gets why I'm into it but doesn't want to lose everything. I'm a bit more reckless and willing to take some pain to learn. So we kinda balance at a point where we'll take some risk but we need to know enough to make her comfortable. My rental is in FL and doesn't cash flow a ton but it's been a decent experience. I'm refinancing and it'll help that cash flow. I've had that place since 2006 and was my primary until 2018 when we moved to Northern VA.
The market in Northern VA (NOVA) is crazy most homes have multiple offers the first day on the market. So really the best way to get a deal is to find something off market and distressed. That brings me to the potential deal. I know of a home in my neighborhood that the tenants aren't paying rent. According to them their lease was up and they started looking for houses. They found a place and their current landlord kept calling the new place asking when they were going to move in. So they didn't get the place. Why would he do that? The story is that the home owner sold the house he was living in and wanted to move back into the house he's now renting out. Now he's stuck in a hotel. The owner got a property management company in and they tried to evict the current tenants for non payment. That went to court and the court ruled that they don't owe anything but have to leave the property in 10 days. (that will be in the next couple days.) However their lawyer said they were going to appeal it and that wouldn't go to trail until next year. The tenants claim that they are still looking for a place and want to move out because they "pay their own". These people are unscrupulous. I know for a fact they have stolen from local stores. They've told be as much. So I don't put too much stock into that.
The way I see it the owner has a couple problems. He has a house he can't rent, sell, or live in. He is also living in a hotel. The tents have a problem in they can't find another place to live. Although how much any of what they say is true is suspect at best. So is there room for me to come in and be a problem solver? First how much equity/cash flow is in the home and would it be worth my time to try and take over the loan? If so that would take care of pretty much all of the owners problems and allow him to find another home. Second, now I have a house with problem tenets. How do I fix that? Could I possibly get them to sign a 6 month lease? They paid rent there for a long time so can I turn them back into decent tenets? I can say that they do take care of the house and the couple times something broke it took the owner forever to fix or he simply didn't. So I believe there was some issues on both sides.
Here are my biggest questions for the forum.
What does everyone think? Would you look into this further or just walk away?
Is there a way for me to find the loan info on the home?
How would you go about dealing with the tenants?
Thank you everyone for your time in reading this giant post.
Everything is a good deal if you can get it at the right price. It all depends on how much the owner currently owns, what kind of loan he has, and how much the payments are. Sometimes you can't just take over someone's loan without the bank calling the entire thing due.
So... lets just assume that you did all the math and made sure it cashed flowed with whatever monthly payment you end up with and your total principal is well under the current as-is fair market value of the home. And that you already talked to your lawyer to see what the 'worst case scenario' would cost in money and time to get them evicted.
I would NOT let those tenants stay no matter what. I would write up a contract with them that stated they would move out in XX amount of days in exchange for a single $2,000 payment (or whatever it takes for them to get out... sometimes offer half of what you would and then if they counter you can 'ponder' it for a while then accept it so they think they got more money out of you) to be paid after they leave the property and return the keys. Then I would BRR the property by fixing it up and getting in good tenants.
Agreed, If you think the numbers work well. I'd offer cash for keys. Let them know you would give them "whatever dollar amount" and they will get it if they move out by a certain date and even every day they don't that amount gets smaller. And try to get them out asap. I'd also make sure they know all items must be removed from the home and no damage done to it. But make sure whatever number that is to get them out, that number is in your overall expenses for the property.
Thank you all for the great idea. I had heard the cash for keys strategy in some of the podcasts. I’ve no idea why I didn’t think of it. Experience probably, I’m working on getting more of that. :)