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Buying a duplex and terminating a lease agreement
In Utah, if I buy a duplex and there is a recently signed lease agreement with the previous owners, but the rent is about $500 lower than it should be, do I have the right to terminate that lease agreement since the agreement is not between myself and the tenant?
Thank you for your help!
No, you do not have the right to terminate the lease agreement since the agreement is not between yourself and the tenant. The tenant has the right to the lease they signed, regardless of what it says, until the end date. After that, they will either leave, you can have them sign a new lease (with your terms), or have them go month-to-month. Once they are month-to-month you can raise rents, give them 60-days notice to vacate, etc.
You could offer them cash for keys when you take over the lease. If you are unfamiliar with what this is, it is when you basically buy them out of their lease. "I'll give you X dollars to sign this contract agreeing to move out early by Y date."
Do you have a property in mind? How much longer is left on the lease? Utah's appreciation is nuts right now. Depending on how the numbers look, it may be worth it to eat the $500 loss until the lease is over if the property is appreciating more than that each month.
Quote from @Mike Gorius:
No, you do not have the right to terminate the lease agreement since the agreement is not between yourself and the tenant. The tenant has the right to the lease they signed, regardless of what it says, until the end date. After that, they will either leave, you can have them sign a new lease (with your terms), or have them go month-to-month. Once they are month-to-month you can raise rents, give them 60-days notice to vacate, etc.
You could offer them cash for keys when you take over the lease. If you are unfamiliar with what this is, it is when you basically buy them out of their lease. "I'll give you X dollars to sign this contract agreeing to move out early by Y date."
Do you have a property in mind? How much longer is left on the lease? Utah's appreciation is nuts right now. Depending on how the numbers look, it may be worth it to eat the $500 loss until the lease is over if the property is appreciating more than that each month.
Yes I’ll be under contract tomorrow. I feel the market in Utah is softening so I am concerned I’m buying at the top of the market, so the lower rent makes me a bit nervous. The lease is in place until next March.
As Mike said, you cannot terminate a lease. However, you can mutually agree to terminate the lease (cash for keys, etc.).
I don't see the Utah market softening at all. Median days on the market is still only 5 days. I see things going back to somewhat normal though. New listing prices are going back to comps rather than comps + 50k or more.
Also, congrats on the duplex! Where is it?
Quote from @Logan McKay Zylstra:Thank you. Vernal. It’s my second one in Vernal and second one overall.
Also, congrats on the duplex! Where is it?
Quote from @Jason Gilbert:
Quote from @Mike Gorius:
No, you do not have the right to terminate the lease agreement since the agreement is not between yourself and the tenant. The tenant has the right to the lease they signed, regardless of what it says, until the end date. After that, they will either leave, you can have them sign a new lease (with your terms), or have them go month-to-month. Once they are month-to-month you can raise rents, give them 60-days notice to vacate, etc.
You could offer them cash for keys when you take over the lease. If you are unfamiliar with what this is, it is when you basically buy them out of their lease. "I'll give you X dollars to sign this contract agreeing to move out early by Y date."
Do you have a property in mind? How much longer is left on the lease? Utah's appreciation is nuts right now. Depending on how the numbers look, it may be worth it to eat the $500 loss until the lease is over if the property is appreciating more than that each month.
Yes I’ll be under contract tomorrow. I feel the market in Utah is softening so I am concerned I’m buying at the top of the market, so the lower rent makes me a bit nervous. The lease is in place until next March.
Are you looking to buy and hold or flip it or what exactly? Like Logan said the market may soften (due to interest rates), but prices are not going down. Even if they do, they'll always come back up and eventually surpass what you bought them for. Don't use this as an excuse to buy a bad deal, but check out the below link.
Quote from @Mike Gorius:Hold. I have. Feeling like by the time I’m ready to retire, retirement will be a luxury, so I’m betting on real estate to help provide that freedom.
Quote from @Jason Gilbert:
Quote from @Mike Gorius:
No, you do not have the right to terminate the lease agreement since the agreement is not between yourself and the tenant. The tenant has the right to the lease they signed, regardless of what it says, until the end date. After that, they will either leave, you can have them sign a new lease (with your terms), or have them go month-to-month. Once they are month-to-month you can raise rents, give them 60-days notice to vacate, etc.
You could offer them cash for keys when you take over the lease. If you are unfamiliar with what this is, it is when you basically buy them out of their lease. "I'll give you X dollars to sign this contract agreeing to move out early by Y date."
Do you have a property in mind? How much longer is left on the lease? Utah's appreciation is nuts right now. Depending on how the numbers look, it may be worth it to eat the $500 loss until the lease is over if the property is appreciating more than that each month.
Yes I’ll be under contract tomorrow. I feel the market in Utah is softening so I am concerned I’m buying at the top of the market, so the lower rent makes me a bit nervous. The lease is in place until next March.
Are you looking to buy and hold or flip it or what exactly? Like Logan said the market may soften (due to interest rates), but prices are not going down. Even if they do, they'll always come back up and eventually surpass what you bought them for. Don't use this as an excuse to buy a bad deal, but check out the below link.
Quote from @Jason Gilbert:
Quote from @Mike Gorius:Hold. I have. Feeling like by the time I’m ready to retire, retirement will be a luxury, so I’m betting on real estate to help provide that freedom.
Quote from @Jason Gilbert:
Quote from @Mike Gorius:
No, you do not have the right to terminate the lease agreement since the agreement is not between yourself and the tenant. The tenant has the right to the lease they signed, regardless of what it says, until the end date. After that, they will either leave, you can have them sign a new lease (with your terms), or have them go month-to-month. Once they are month-to-month you can raise rents, give them 60-days notice to vacate, etc.
You could offer them cash for keys when you take over the lease. If you are unfamiliar with what this is, it is when you basically buy them out of their lease. "I'll give you X dollars to sign this contract agreeing to move out early by Y date."
Do you have a property in mind? How much longer is left on the lease? Utah's appreciation is nuts right now. Depending on how the numbers look, it may be worth it to eat the $500 loss until the lease is over if the property is appreciating more than that each month.
Yes I’ll be under contract tomorrow. I feel the market in Utah is softening so I am concerned I’m buying at the top of the market, so the lower rent makes me a bit nervous. The lease is in place until next March.
Are you looking to buy and hold or flip it or what exactly? Like Logan said the market may soften (due to interest rates), but prices are not going down. Even if they do, they'll always come back up and eventually surpass what you bought them for. Don't use this as an excuse to buy a bad deal, but check out the below link.
Same here, man. I keep finding more and more reasons to empty my 401K and buy cash-flowing assets with it. Been too chicken to pull the trigger yet, lol!
I'm new to investment myself. Currently only have passive investments in a few other states. I'm very interested in learning from you folks who are doing it. I'm grateful you posted this here and got this conversation going.
May I ask how you funded your deal? I'm curious as I'm new. Only making smaller investments at the time but really looking forward to going bigger soon.
Quote from @Chris Forbush:
I'm new to investment myself. Currently only have passive investments in a few other states. I'm very interested in learning from you folks who are doing it. I'm grateful you posted this here and got this conversation going.
May I ask how you funded your deal? I'm curious as I'm new. Only making smaller investments at the time but really looking forward to going bigger soon.
ive been Financing using conventional 30 year loans. I’m not interested in house hacking with four small kids and I am not scrappy enough to find private lenders.