Should I buy a good deal w/ 2 non-paying tenants/squatters?
Hi,
I found this off-market deal in Philly and was wondering whether it's worth it to proceed. I feel like I must be crazy because nowadays everyone is dying to evict their non-paying tenants out but I'm looking to voluntarily take on TWO of them in one property 😐.
This property was previously sold within one day of being advertised by the wholesaler but the deal fell apart as it was supposed to be delivered vacant but they found 2 tenants who stopped paying and are relying on the eviction ban to stay.
I would get about 10% discount from the previous sales price (the most the wholesale/owners would agree to with the squatters), new price being about $110k.
The ARV is at $240k (there is a direct comps from an almost identical property few doors down sold recently).
It would probably cost me about 40-50k to fix it (to be safe let's say 60k to factor in squatter damages).
It will rent for about 1400/month.
Currently the squatters have a lease renting one bedroom each for 500/month with lease up in Sept this year. I think there is about a 50/50% chance that they will both take a cash for keys offer (I plan to offer them a generous amount to increase my chances). Else I will go with the legal route. With the lawyers I've spoken to, seems like this is a 6-8+ months process.
Is it worth it to take the gamble and hope that the tenants will just take the money and go, as this is too good of a deal to pass up (even with the 50/50 chance that I might not gain posession for another year)?