I have been waiting to close on this MF deal since January. The seller is a non-profit and is relocating the current tenants prior to closing. There is one tenant left that is dragging her feet but her lease expires on April 30th. They were supposed to have her relocated by April 15th but the new place is not ready.
The listing agent and I have come up with an idea for the non-profit to lease the one unit from me (until it is vacant) and let the current tenant sublease from them so that I am guaranteed payment until this tenant moves out....even at a higher monthly rate than I will get when I place my own tenants.
This way, I can go ahead and close and start my remodel.
I see two issues and I don't know whether they are big or not.
1) I can only get builders risk insurance on the complex before the remodel is complete and I have at least 50% occupancy. What kind of risk is this with one tenant on the property and construction going on?
2) What if she decides she just can't bring herself to move (as is the case--- she cries all the time about having to move)? The non profit probably won't want to keep paying me forever and I would eventually have to evict.
Should I just be patient and wait the two additional weeks?
I'd wait until they were gone. Two weeks is nothing and they won't be your headache.
Need 50% occupancy for builders risk? We get builders risk on empty houses, and I thought it was for Only empty houses, as far sfr's are concerned.
@Wayne Brooks I guess that didn't come across correctly. I can only get builders risk UNTIL I have at least 50% occupancy. So I would have a tenant in the property without a regular landlord policy.
I've been in a similar situation several times however somewhat the other way around. We have rehabbed vacated apartment buildings and phased the leasing. For example let's say I phased 12 units in 3 phases of sets of 4. I would fill units 1 by 1 which doesn't always meet specific landlord policies occupancy numbers. I would double up, having builders risk and then adding the landlord/habitational policy as soon as the first tenant moved in...having low occupancy for short periods of time isn't going to lead to a claim denial (in my opinion) especially from a good insurance company. They might try to fight you on a theft claim because most of the units are vacant however builders risk generally includes theft. Are you using Zurich for BR?
*This is not legal advice
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