I'm a new investor in Nashville, TN. I'm in the process of buying a SFH but just found out the property management company the seller is using found new tenants moving in at the end of the month.
I plan on using the BRRRR method on this property so I can't have any tenants living there for a few months, nor can I afford to rent out at below market rates.
What are my options?
Does new ownership void the lease? Can something be done since they do not move in till later this month?
Thanks for the help!
Unfortunately for you, your purchase does not void any preexisting agreement. You are now just the owner of that agreement. First thing you'll want to do is find the length of the agreement. Your best case scenario would be that it's month-to-month, which means you'll be able to have them vacate the property in the near future. If the lease is for a year, you'll either have to bite the bullet and wait for it to run it's course or offer them a buyout in hopes to draw them away from the property. It would be a new take on cash for keys.
Typically, state law says you have to honor the lease. What does your contract say about occupancy?
If you're in your due diligence phase, terminate the contract or renegotiate it. You also might be able to use your final walkthrough contingency if you have one to provide an out. The property would have to be the same or better than what you found it, obviously not the case here. You can also offer cash for keys for the new tenants or simply try to negotiate them out of the lease. If you have a financing contingency that could be another out for you in this scenario
When do you close? If it is Aug 1, you are early enough that they have 3 weeks to find a new place. Offer them money not to move in. In the future, specify that the unit has to be vacant upon possession.
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