Palo Alto, CA · Member since 2014 · 104 posts · 14 votes
Hi
First time on the forum so I am hope I am on the correct board.
I am buying my first investment - SFH in which the owner was running his own business treating patients. Owner went into foreclosure. now its a REO property. Bank only cares about selling it for max price. its upto me to have the owner as tenant or not.
I plan to keep the tenant. the numbers work out well. the rent is quite high and he want to continue to run the business at the place. so i don't have to find a new tenant.
Are there anything I need to be careful about? Will I have to be liable for his business -eg he doesn't pay his biz tax and I get into trouble.
Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes
11y
I think you should consider the fact that the previous owner, your future potential tenant, had his house foreclosed. If he couldn't afford the house and went into foreclosure why would you want him as a tenant. Red flags everywhere. Dont buy the property unless it is vacant or dont buy it.
If his business is so successful that he can afford a higher rent, then he can afford a mortgage. He is probably looking to maximize his time in this property by saying that he will pay a high rent, but in reality just stringing along the new owner, while getting a few additional months of not paying rent. Just my thoughts based on experience. Everyone has their risk tolerance.
I believe the more important question is whether you can afford 6 months (or longer) of carrying the property with NO rent coming in.