Hi BP, I would like some advice on a triplex I will be acquiring on June 30, 2021. The current owner disclosed that one of the tenants (occupying the biggest unit) has not paid since April, 2020. His lawyer filed the eviction with the courts, but due to eviction moratorium no court date has been scheduled. I'm in NJ, and eviction ban is scheduled to end on July 15, 2021. I don't feel this is a deal breaker due to the additional units covering the mortgage & expenses, but I would like advice. Should I change the closing date from 6/30/21 to a date after July 15, 2021? I'm assuming I cannot collect or receive the past due amount to current owner? Also, once I obtain ownership, do I file with the courts again or can I pick up where the previous owner left off. I appreciate any advice and thank you for your taking the time to read my situation.
An important question is the deal you are getting. If it is on market and you are not buying at a discount, I would ask the seller to extend the date or give you a closing cost credit to help you pay for any possible attorney fees you will incur evicting the tenant.
As @Gaetano Ciambriello stated; it depends on the discount you are getting. It also is not likely the NJ eviction moratorium is going to end in July. There are talks about extending it to Dec. 31, 2021.
There are also thousands of evictions pending in NJ. It will take several months/years (its the government) to work through them all AFTER the eviction ban has been dropped.
"The court system reports 58,135 eviction filings were made between May 2020 and the end of April 2021."
I would speak to an eviction attorney and see what their thoughts are. Maybe you are able to get a discount and provide a cash for keys offer to the tenant.
Thank you Gaetano. I appreciate your advice. I received a credit for a few issues after the home inspection was completed, hopefully he'll agree to a credit or extension. Once this tenant is removed ( it's currently rented below market), I plan to do slight upgrades and increase the rent on the next tenant moving in. I have alot invested in this so far with earnest money, appraisal fees, inspection, insurance, lender fees, etc I feel it will be a great loss if I back out now. Thank you again for your advice. I'll post the outcome, hopefully it will help another BP member.
Thank you Charles. I really appreciate the advice. There are programs in NJ that assist landlords and renters with past due rent due to COVID. I' m hoping she will comply with applying to the program, but I will definitely see if the seller would offer a credit for the eviction process. Thank you again.
Update I closed on the Triplex. Thank you for the advice Gaetano & Charles. The seller agreed to cover the rent for 2 additional months, and the seller's attorney agreed to finish and complete the eviction process as well. I'm very excited to start my investor journey and feel this property will pay off in the long wrong. Even with the 1 tenant pending eviction; the numbers still work which is a blessing for me.
I placed an offer for a duplex this week; if the seller accepts I will be closing on my next property soon.
As mentioned by @Charles Carillo , you should prepare for the possibility that it will be extended until the end of the year. It's important to be conservative. If the deal doesn't work, then at least you have the chance to walk away from it before you're tied to it.