Inheriting tenants, How do I know they are up to date on rent?

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Inheriting tenants, How do I know they are up to date on rent?

Ryan Cleary
Investor · Palm Beach County, FL · Member since 2019 · 370 posts · 330 votes

Though I don't feel great about it, I am in contract for a duplex where one unit is occupied by a long term tenant paying under market rent.  Though I would love to close on an unoccupied property, in this circumstance I would like to keep the current tenants happy (I don't know... I am trying to be a good guy even though Ohio is very easy to get someone out).  

My only concern is that I want to be 100% certain that these tenants are up to date on all rents and that they are paying the amount told.  How do I cover myself here?

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Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
5y
Originally posted by @Ryan Cleary:

Though I don't feel great about it, I am in contract for a duplex where one unit is occupied by a long term tenant paying under market rent.  Though I would love to close on an unoccupied property, in this circumstance I would like to keep the current tenants happy (I don't know... I am trying to be a good guy even though Ohio is very easy to get someone out).  

My only concern is that I want to be 100% certain that these tenants are up to date on all rents and that they are paying the amount told.  How do I cover myself here?

 Ask to see bank statements showing the rent has been deposited into the landlord's accounts.

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    5y
    Having a tenant in-place can be better than closing on a vacant property.  With a vacant unit, you are guaranteed to have no rent until you get a new resident in.  With an existing resident you have revenue from day one, and your risk is just the cost to evict and re-lease.

    If you want some level of confidence that you have a viable resident, ask the seller to provide bank statements showing the deposits of rent.
    2Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    5y

    @Ryan Cleary  You really should get an estoppel certificate signed by the tenants.  That confirms lease terms and deposits held.

    Any deposits and last month's rent held by the seller should transfer to you at closing and go into your escrow account.

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Ryan Cleary:

    Though I don't feel great about it, I am in contract for a duplex where one unit is occupied by a long term tenant paying under market rent.  Though I would love to close on an unoccupied property, in this circumstance I would like to keep the current tenants happy (I don't know... I am trying to be a good guy even though Ohio is very easy to get someone out).  

    My only concern is that I want to be 100% certain that these tenants are up to date on all rents and that they are paying the amount told.  How do I cover myself here?

     Ask to see bank statements showing the rent has been deposited into the landlord's accounts.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    3Reply
  • Sarah Brown
    Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
    5y

    I agree with the estoppel.  Also, the seller should have record of rents received and expenses paid.  It should be considered as part of your due diligence process.  I would recommend finding RE agent that can help you through some of these details. 

    1Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Ryan Cleary:

    Though I don't feel great about it, I am in contract for a duplex where one unit is occupied by a long term tenant paying under market rent.  Though I would love to close on an unoccupied property, in this circumstance I would like to keep the current tenants happy (I don't know... I am trying to be a good guy even though Ohio is very easy to get someone out).  

    My only concern is that I want to be 100% certain that these tenants are up to date on all rents and that they are paying the amount told.  How do I cover myself here?

    I would have your realtor verify with the owner that the tenants are up to date and get some sort of written proof. A listing agent can get in some serious trouble if they misrepresent details of a property! 

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  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    @Ryan Cleary it should be part of your due diligence process. During due diligence you want a P+L, leases, and a rental rider. You should be examining and clarifying deferred maintenance through a home inspection, Rental payments, how utilities are split, and reviewing the lease agreement.

    As you get closer to close you need tenant contact info, full names, phone numbers, emails, and if you can get it a rental application. Although some of this is easier said than done you should at least ask for it and get a large portion of it.

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