Costa Mesa CA · Member since 2020 · 19 posts · 8 votes
I just went under contract on a row home property in Philadelphia. It's a 3 bedroom 1 bath SFH with current tenants paying on a month to month lease. Seller is requesting cash offers only and 30 days or sooner on closing. In the original offer we requested for the seller to provide the property vacant at closing. The listing agent got back to us saying "serving vacant would be a deal breaker". Owner has verbally said to our agent that the current tenants are up to date on rent. I'm assuming the seller is apprehensive that serving vacant could delay closing? Other than that I don't understand why the seller would not want to provide vacant at closing. I even requested permission and reached out to the current tenant to get more details but have not received a response. Does this give off any red flags to anyone? Does anyone have any advice on what we can do to protect ourselves in this situation? My biggest concern is that we get the property and the tenants refuse to leave after terminating their rental agreement. I appreciate any advice.
Perhaps the seller doesn't want to remove the tenants and then have to deal with having an empty rental property in the event the closing doesn't go as planned.
I can see why they would be nervous to give a 30-day notice to the tenant just because the property is now under contract. First, some states and I'm all but sure California is one of them, require a lot to give a no-cause notice (check your laws, but Oregon is something like 60 days and you have to pay their moving expenses or something like that). Also, what if the offer falls through. Now they're not getting rental income.
This is a risk for you if you're set on getting the tenant out. Again, check your local laws as a no-cause notice could be expensive and take a while and evicting if they choose to stay could be rather arduous. If it's still worth it even with that risk, make sure to get documentation from the seller proving the tenant is paying on time.
Doesn't sound like a red flag to me. Sounds like a GREAT deal! A property where you have a ton of leverage to negotiate the price, PLUS you have paying tenants right off the bat? Tenants that will probably live there for a long time? This is a total no brainer in my book.
Unless the sellers are saying you have to keep the rent below market for a house in its current condition and location I would personally jump all over this deal.
Sign em up for a year long lease right away and move on to finding the next house for your gut and remodel. Put it this way, unless you have a bunch of experience doing remodels, it's going to take longer and cost more than you think. Lets say it takes 6 months, how much rent would you have collected in that 6 months that you would have to make up for with higher rents on a newly rehabbed house?
I'm confused about what is confusing. The seller has no reason or incentive to sell it vacant, on the contrary it is more of a hassle. You're already under contract but generally speaking such a request makes your offer less appealing to the seller.
**UPDATE on the purchase** It's been 3 months since I went under contract and the "Red Flag" that I was inquiring on is now very clear. Before I went under contract the seller tried to remove the tenant. He only owned the property for 9 months and the property is in terrible shape so I'm assuming he had plans to renovate. The tenant has been dealing with cancer and says she's unable to move. Each month she continues to pay rent and requests for more time to look for a new rental to move into. It appears the seller thought is was a better option to sell the property than proceed with evictions and go through the moral dilemma of kicking out a elderly tenant with cancer.