What if a new property fully occupied???

Question

I am trying to purchase an investment property that I can move into myself if all units are occupied, but tenants aren't on a month-to-month lease. How do I go about opening up a unit for myself to move in before I sell my house?

Michelle Krupa · Answer

You have to comply with the terms of the lease agreements. I would see which unit is set to renew at the earliest date and would send them a notice of non-renewal to terminate the lease on the lease end date so that you can at least move in at the end of their lease. You could also offer them a buy out. You could also try to line up closing with the lease end date and have it be part of the contract that the current owner does proper notice of non-renewal. Then just don't close on the property if they are not moved out which you can confirm at your final inspection.

Patricia Steiner · Answer

You're required to honor the leases that are in place.

You can try the methods described by the excellent contributors above...or maybe you need to rethink your housing and/or the purchase.  And, this:  as part of your vetting/inspection period, require a copy of all leases and the rent roll - showing the tenants' payment history.  I hate buying an occupied property because you're also buying the problems if the current owner's rental criteria was not in keeping with the tenant quality I require.  My clients who chose to overlook potential issues prior to purchase, ended up living through some really bad and costly stuff afterwards.

Hope this helps.

Joel Miller · Answer

Check the lease. Our lease has a clause that says the landlord can end the lease for any reason during the term of the lease by giving 30 days written notice. There doesn't have to be a violation. But that sort of a clause would have to be in the lease already to use it.

Drew Sygit · Answer

Offer a tenant a buyout.

You could also live in the basement.

Arman Ahmed · Answer

If all units are occupied and tenants are on active leases, you generally can’t just move someone out early unless there’s a lease violation or a mutual agreement. The cleanest options are either negotiating a cash-for-keys situation with a tenant who’s willing to leave early, waiting until the first lease expires and choosing not to renew, or specifically targeting a property where at least one unit is already vacant.

If you plan to owner-occupy, it’s really important to line that up before closing so you don’t get stuck carrying two properties longer than expected. Let me know if you want help thinking through how to structure that on your next deal.

Richard F. · Answer

You are bound to the terms of their existing, valid, Rental Agreement and the requirements of local LL/Tenant laws with regard to proper notice. You need to know with certainty the current ending date of each Agreement. Either the Seller, if they are willing to cooperate, prior to closing can send the Tenant a Notice of Termination in accordance with your laws. Alternatively, after closing, you can send the Notice at the earliest lawful date.

A possible alternative is to offer "Cash for Keys", which is pretty self explanatory. You just need to negotiate how much cash will be required, and ensure the Tenant is in fact out prior to payment. Also ensure Tenant has paid all utils current. In some locales Owner can get stuck paying for delinquent utils.

Don't forget to confirm with Seller (and confirm with Tenants) each unit's Security Deposit Status. Those funds should be transferred to Buyer, as they do belong to the Tenants until and unless they vacate.

If any Tenants are on M-T-M, again, check with local law, but generally a 30 or 45 day Notice prior to end date is still required.