Rental Property Investor 路 San Jose 路 Member since 2020 路 44 posts 路 22 votes
I want to buy this duplex and found out that the 2 current tenants just signed a new lease for a way lower rent than the market that will expire next year July 2022. My question is, once I buy the duplex, as a new owner, can I change their rent price? I'm thinking of increasing according to median rent range and this will help me get a decent return.
It is my understanding that you are stuck with the "current" lease, I could be wrong so I would check with a local realtor or investor.
Another option would be to offer a "Cash for Keys" type of deal to the tenants, get them to walk away willingly. May save you a some money and time apposed to trying to raise rent and potentially evict a valid lease.
It is my understanding that you are stuck with the "current" lease, I could be wrong so I would check with a local realtor or investor.
Another option would be to offer a "Cash for Keys" type of deal to the tenants, get them to walk away willingly. May save you a some money and time apposed to trying to raise rent and potentially evict a valid lease.
If you acquire a property with leases in effect, you are required to honor those lease terms until expiration. You can make your offer contingent upon vacant possession at closing -meaning the seller will have to settle with and remove the tenants by the closing date. It's most often done with month-to-month tenancy and with delinquent tenants - but it rarely is acceptable to a seller with paying tenants in place under lease contracts...it's too costly and if you fail to close, the seller is stuck with a vacant property.
So accept the tenants as is (be sure to do the vetting - rent rolls, leases, past screening reports) and hold out until its time for renewal or walk. Just is...
You may also be able to amend the lease with the new rent rate as long as the tenants have some sort of time period to decide whether it would be beneficial for them to stay at the new rate or leave. Ask an attorney about this method though. It could be seen as unfavorable but it could still be legal.