Buying a home with tenant in place
I am buying a primary home and moving in when the tenants move out. Just wanted to know if my offer to the owner should say anything specifically about the renter? Also is there any Standard SOP that I need to follow when it comes to this deal.
I would make a contract requirement that the house is delivered vacant at closing. If it isn't, all sorts of not nice things can transpire.
I don't know that I can because there lease does not end until 9/30. However Im with you that's why im asking, I don't know if I can get the deposit from the land lord, etc.
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@Darren Redfearn the seller owes you the deposit and any advance rents paid. If I wanted to occupy the property I'd make the offer contingent on delivering the asset vacant and let them figure it out.
So you'd say that even with the tenants lease ending at 9/30 @Bjorn Ahlblad my closing would be 8/15
Yes, delivering vacant is ideal. If they won't deliver vacant, here in Massachusetts, we use estoppel certificates which highlight all the key information like rent amount, security deposits, etc.
Also, ask for bank records showing that they have received consistent rent payments for the amount the seller stated.
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You guys saved my butt on this one. @Mason Hickman
Quote from @John Teachout:
I would make a contract requirement that the house is delivered vacant at closing. If it isn't, all sorts of not nice things can transpire.
John, would you also consider that essential to be a part of the contract when purchasing a multi-family building with only month-to-month tenants? I am wondering if I should make my offer require the property to be delivered vacant. I am afraid of buying the property with tenants in place who I do not know and then having them end up as squatters.
@Steven Hahn btw I just read through the lease that the tenants signed and it says that in the event that the landlord sells the property then they can be given a 30 notice to vacate.
Quote from @Darren Redfearn:
@Steven Hahn btw I just read through the lease that the tenants signed and it says that in the event that the landlord sells the property then they can be given a 30 notice to vacate.
That notice should have already been given as you're past the 30 days prior to closing. If it had been posted sooner, the property could have been vacant at closing. Won't be as simple now.
Quote from @Steven Hahn:
Quote from @John Teachout:
I would make a contract requirement that the house is delivered vacant at closing. If it isn't, all sorts of not nice things can transpire.
John, would you also consider that essential to be a part of the contract when purchasing a multi-family building with only month-to-month tenants? I am wondering if I should make my offer require the property to be delivered vacant. I am afraid of buying the property with tenants in place who I do not know and then having them end up as squatters.
You typically wouldn't want a multi family to be delivered vacant unless you were going to complete a major rehab. Keep some rent coming in and vacate the units and refurb one at a time.
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Quote from @Darren Redfearn:
So you'd say that even with the tenants lease ending at 9/30 @Bjorn Ahlblad my closing would be 8/15
@Darren Redfearn I would simply ask the seller to pay the tenant off. What if they do not leave 9/30........eviction will take months.
@John Teachout I haven’t went under contract yet. I was wondering what moves I should make before going under contract. This has been so helpful, thank you all. I’m definitely going to require that the land lord gives notice to the tenant to vacate before I make an offer.
Quote from @Darren Redfearn:
I am buying a primary home and moving in when the tenants move out. Just wanted to know if my offer to the owner should say anything specifically about the renter? Also is there any Standard SOP that I need to follow when it comes to this deal.
You have to honor the existing lease. If their lease does not end until 9/30, then I would set your closing for 10/15 so the Seller has time to move them out, clean the place up, and deliver it to you vacant. If you purchase with the tenants living there, you take on the work of getting them out once the lease is done. There's a chance they could not pay last month's rent, not leave when they're supposed to, not clean or repair on the way out, etc.
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Make sure there is a lease in place
@Darren Redfearn do you have a real estate lawyer that is reviewing the leases and handling the closing? Don’t get caught with a tenant that won’t be moving out. You don’t want to go through eviction process in MA and also if they are definitely moving, get some proof they are. I’ve had to get Estoppels for commercial tenants not residential before but get an exact copy of the lease and even do a tenant interview to make sure they have the same copy. This is your due diligence period. Leave No stone unturned.
One of my business models for certain areas/properties involves a general preference to keep tenants in place.
I admit that good deeds rarely go unpunished, however.
I would extend escrow or do a holdback of a certain dollar amount with the Seller so if the tenant doesn't leave, you have the money to do the eviction.
I would study up on the tenant protection laws and make sure that you can actually evict them.
If there is a 60 day notice needed, make sure that is sent out while in escrow to get the clock ticking.
I'm coming from LA where it is very tenant friendly, so I can't recommend to my clients to buy with existing tenants in place if they plan on moving in.
@Darren Redfearn
Personally I would not buy the property with a tenant in place. It could very easily become a huge issue for you. If you do move forward,make sure to verify tenant has been making payments as agreed. Also get security deposit and any payments while you owned the property.
Quote from @Eliott Elias:
Make sure there is a lease in place
Thank you everyone, I am going with a similar property in that neighborhood with no tenant.