Long story very VERY short-

My husband and I are interested in purchasing a property for renovation. There is one current tenant who doesn't want to move.  He is not rent controlled, is a sibling of the owner selling the building and is in his 80s, not in great health, doesn't speak English and is illiterate in his native language. Legally, we could evict him as he is not and has never paid rent, but it does make me feel kind of yucky. 

Would you do it? 

First of all I would make sure there will be absolutely clear title.  How did one sibling get the property and the other sibling get nada?  Obviously, the seller could have inherited or bought from their original owner siblings, but I'd make damn sure about that.    

Looking at this from a purely business perspective it makes sense to do this, but since it would be your personal home... Have you talked to the non-owning sibling and offered him cash for keys?  If you are getting say a $200K discount offering him say $10K to leave makes sense if he will agree to it.   

Originally posted by @Cal C.:

First of all I would make sure there will be absolutely clear title.  How did one sibling get the property and the other sibling get nada?  Obviously, the seller could have inherited or bought from their original owner siblings, but I'd make damn sure about that.    

Looking at this from a purely business perspective it makes sense to do this, but since it would be your personal home... Have you talked to the non-owning sibling and offered him cash for keys?  If you are getting say a $200K discount offering him say $10K to leave makes sense if he will agree to it.   

 We have not approached the tenant as we were told by the seller's agent that he refuses to speak to anyone.  I agree that a buyout would be the easiest way to go, but I'm afraid that he's so bitter that he won't take it.

One sibling was on the mortgage and the deed and the other was not.  It's not pretty.

@tina 

@Tina Caroll  my friend bought a 6-unit in Cincinnati 3 months ago and one of the residents was an elderly woman paying significantly below market rent. He had the same dilemma and was brainstorming strategies before he closed. 

Literally the day after he closed the resident passed away. Obviously this is a unique situation but it was too relevant not to share. 

Re: your situation I'd be familiar with tenant/landlord laws and speak to an attorney about it. Then, list out your options because the below-market rent is a good "value add" opportunity when the resident does move out. Personally, it's a case-by-case situation and I'd have to actually speak with the resident to determine the most appropriate action. 

Originally posted by @Joe Fairless:

@tina 

@Tina Caroll my friend bought a 6-unit in Cincinnati 3 months ago and one of the residents was an elderly woman paying significantly below market rent. He had the same dilemma and was brainstorming strategies before he closed. 

Literally the day after he closed the resident passed away. Obviously this is a unique situation but it was too relevant not to share. 

Re: your situation I'd be familiar with tenant/landlord laws and speak to an attorney about it. Then, list out your options because the below-market rent is a good "value add" opportunity when the resident does move out. Personally, it's a case-by-case situation and I'd have to actually speak with the resident to determine the most appropriate action. 

 Thanks for the story! This tenant actually moved in his son (who is in his 50s) and I imagine would fight saying that he is rent regulated, even though he is not.  Unfortunately, neither me nor my husband speak his language so we would actually have to hire someone to try to negotiate with this guy.

We're concerned about making a buyout offer to him pre-closing because he may actually tell his sister, who could then renege on the deal and deliver it vacant at ask (it's only priced this low because of all this family drama and the condition that the building is sold with him in it.)  They seem to be at odds, but if he finds out we pay him off for, say, $20k and he's going to move out, she would be smart to raise the price to full market which is double or triple what it's listed for now.

Make it part of the agreement that the seller set up a housing solution for the sibling. Especially given the age and language difficulties you mentioned. That is what family should do IMO. The sibling might not understand what eviction entails.  The seller giving the sibling a free ride all along means that the sibling probably would need that sort of help anyway. 

Is it a good enough deal for you to have to deal with a problem tnenat? Can you still manage the other units and make money while you figure out what to do with this one tenant ? There is usually always a reason why a building is cheap. As long as I stick to my morals and can sleep at night business is business.

Originally posted by @Steve Babiak:

Make it part of the agreement that the seller set up a housing solution for the sibling. Especially given the age and language difficulties you mentioned. That is what family should do IMO. The sibling might not understand what eviction entails.  The seller giving the sibling a free ride all along means that the sibling probably would need that sort of help anyway. 

 HI Steve-

I wish we could do this (and I agree, it's the right thing to do!) but that would mean the owner could seriously jack up the price which we obviously dont want. The reason it's a stellar deal is because of this issue- if they deliver vacant, it's easily worth 2-3x more.

I totally agree though, it's sad that a family is doing this to each other.  He claims he's entitled to half of the sale of the property which is why he's not leaving, she says he's out of luck... kind of heartbreaking, but *someone* is gonna buy it so it mind as well be us...

@Joe Fairless  

Passed away the day after.  That's crazy and sad.

@Tina Caroll  

Have you considered getting a 3rd party translator?

This could help open up some dialogue.  Someone who could speak to the older man, and not have a side.

For me, I don't think I could do evict him.  If I was going to move forward with this, I would ask for a discount in the price, to cover his extra cost.

Originally posted by @Elizabeth C.:

Is it a good enough deal for you to have to deal with a problem tnenat? Can you still manage the other units and make money while you figure out what to do with this one tenant ? There is usually always a reason why a building is cheap. As long as I stick to my morals and can sleep at night business is business.

We want to renovate the whole building and convert it into either a single family or an owners duplex and a rental (the one that he's residing in.)  We would be the other "tenant" in the building, but there is a fear that he would make renovations basically impossible during the time that we're trying to get him out.

Welcome to real estate reality. You did not create the situation nor are you a bad person. You are (considering) buying a property and intend to receive the benefits of ownership (possession) as bargained for. 

Also, the older gentlemen has made decisions in his life for which he, and only he, is responsible for, such as not studying English, just for one.

Would you treat this real estate differently if the gentleman had, in fact, died in the house? 

I believe the opportunity bargained for could include an agreement to assist the tenant with his next chapter of life. Since remaining in the property will not be a long term option, he now "gets" to chose where he would prefer to live, whether a remote, woodsy location in a small town or in a high density assisted living community; whatever. 

My suggestion is that your best approach, should you buy the property, is to be like a strong but loving parent and unwavering in you approach to his situation. Think about what he has witnessed in his lifetime and remind him, thru interpreter, that he is probably a surviver and will survive and probably thrive in this next, happy chapter of his life.

And if he doesn't like that, just kick him out.

Does the deal make sense if you get zero rent for that one unit?  If so, then you can be the nice person and let him stay until he passes away. If not, how much lower would it have to go so that he can stay at zero rent?  BTW you are buying and keeping the problem this way; you will still have lots of challenges with this sort of tenant, but since he is elderly he could pass away soon - of course he could outlive you too. 

Originally posted by @Rick Harmon:

And if he doesn't like that, just kick him out.

This made me LOL, I'm probably an awful person.

To my credit, I am an extremely customer-centric type of person and am extremely non-threatening (my husband is the bad cop, I'm the good cop) and we are *hoping* that he's just acting this nasty because he's so angry at his sister but would maybe be friendlier to us. I am concerned about his son, who I think is probably driving this whole situation more than his elderly father.

You guys are making me feel better. This is an emotionally tough situation and no one wants to toss an old man onto the street, but you are right to say that he's made his decisions and has been living for free for something like 45 years.  

 @Steve Babiak:

 Yes and no.  We don't need the rental income (assuming they accept our offer, which is less than ask obviously) but if he makes it difficult to renovate by calling the DOB or sabotage, that's going to be an issue.  Also, we would obviously rather renovate the entire building at once instead of doing everything EXCEPT his unit while we wait for him to move out (permits and costs will add up doing it twice.)

First, I'd go ahead and get the place under contract with a longer than normal inspection period...if it's that great a deal in NYC, there are plenty of people on it....if there aren't plenty of people in the land of "I'll make you an offer you can't refuse", then there maybe other issues with this property that aren't readily apparent.  What language does he speak?  Does his son speak english?  I'd find an attractive female with a great voice who speaks his language to chat with him and explain that the property is being sold.  Depending on the language, you could probably get a local college student to work this for you for a few bucks.  Try posting an ad for someone on CL and see what comes back.  I would contact a couple of local attorneys and see what the options and costs would be to get them both out.  Factor those costs into your deal and see if it's still worth the headache to you.  How long has it been on the market?

Originally posted by @Andy Luick:

First, I'd go ahead and get the place under contract with a longer than normal inspection period...if it's that great a deal in NYC, there are plenty of people on it....if there aren't plenty of people in the land of "I'll make you an offer you can't refuse", then there maybe other issues with this property that aren't readily apparent.  What language does he speak?  Does his son speak english?  I'd find an attractive female with a great voice who speaks his language to chat with him and explain that the property is being sold.  Depending on the language, you could probably get a local college student to work this for you for a few bucks.  Try posting an ad for someone on CL and see what comes back.  I would contact a couple of local attorneys and see what the options and costs would be to get them both out.  Factor those costs into your deal and see if it's still worth the headache to you.  How long has it been on the market?

a few weeks.  They're requiring cash-only which is why I think the buyers' market is small.  I've used CL before for translation gigs, would def. do it again.  Not sure about the son, but I fully do NOT trust him to accurately translate for me as it's in his best interest to stay in the apt.

Interesting to see this. I just had a file a NOD today on an elderly borrower that stopped paying on a loan we bought. I would have been happy to work with her but she just hangs up on our servicer and refuses to talk to them.

It's not personal but you dint get a free ride.  If you wanta stay, you gota pay.

Also related I got a DIL from another elderly borrower yesterday, they were very nice and we helped them with some cash for keys.  They knew they could not afford to stay and just needed someone to work with them on the transition.

To expand upon this- for people who have done a cash-for-keys arrangement, how did you calculate your base offer?

edit- base offer to the tenant, not the building owner.

Without giving you a satisfactory answer, I'll say situations like this are why people think landlords are scumbags: it's because sellers and/or the market sets up situations where people with a conscience steer clear and only someone willing to be the ******* will dive in. I've walked from a number of these, including a very similar situation of the estate selling a 2U with the SSI son still in residence.

Put something in your offer saying you want all units vacant.

Let this persona family member deal with finding somewhere else for them. It's a red flag to me that the seller is just hanging this family member out to dry by selling the place out from under him.

Originally posted by @Johann Jells:

Without giving you a satisfactory answer, I'll say situations like this are why people think landlords are scumbags: it's because sellers and/or the market sets up situations where people with a conscience steer clear and only someone willing to be the ******* will dive in. I've walked from a number of these, including a very similar situation of the estate selling a 2U with the SSI son still in residence.

 While I'm inclined to agree with you, this situation seems fraught with drama on both sides- the brother has sued the sister a few times, now she's trying to sell the place and he's actively trying to sabotaging the deal... I think the over-arcing scummy thing here is between the two of them, not the buyer who is trying to do the right thing.  We would absolutely buy him out with a totally fair offer if he would accept it, which is beyond our legal obligation and probably beyond what most people would do. 

Do you think that the legal owner of the building should be punished forever because her brother is angry that he didn't get deeded the property instead of her?  She's also somewhere around 80 years old and it sounds like she just wants out of the house as he's actively trying to make her miserable in the home on which she made mortgage payments and then allowed him to live in for free.

edit: for words.

I know several people with long-entrenched family members living for free in a home that was paid for by other members, long gone or still alive. Fraught with drama is an understatement....even an amazing deal may not be worth getting involved in this. You'll always be perceived as the bad guy, and the eventual time and aggravation might not be worth it.

Originally posted by @Aly L:

I know several people with long-entrenched family members living for free in a home that was paid for by other members, long gone or still alive. Fraught with drama is an understatement....even an amazing deal may not be worth getting involved in this. You'll always be perceived as the bad guy, and the eventual time and aggravation might not be worth it.

 Ugh, it's so sad that people actively try to screw each other over in these situations.  Remind me to never go into biz with family without signed contracts in place (although this woman has the clearest proof that she owns it- the mortgage, satisfaction of mortgage and the deed...apparently he's not convinced...)

Tina, while the battle is between the elderly siblings, she's looking for a "hitman" to come in and do her dirty work.  I wonder if "delivered vacant" even applies here, what you would have is a squatting family member. It sounds like the seller would not provide that anyway. Can you make an offer and use any other contingency like inspections to buy time and provide an out if you need it?  

Speaking as a husband of an NYC social worker, NOWHERE has social services funded like NYC. It's entirely possible the man can be foisted off on the public via some public eldercare/nursing home program. But that's not something you want to get into without even a contract.

Originally posted by @Johann Jells:

I wonder if "delivered vacant" even applies here, what you would have is a squatting family member. It sounds like the seller would not provide that anyway. Can you make an offer and use any other contingency like inspections to buy time and provide an out if you need it?  

Speaking as a husband of an NYC social worker, NOWHERE has social services funded like NYC. It's entirely possible the man can be foisted off on the public via some public eldercare/nursing home program. But that's not something you want to get into without even a contract.

 I don't think they will deliver it vacant at the same price, that's for sure.  The reason it's SO heavily discounted (think 1/3-1/2 of market) is because of this issue.  If it was delivered vacant it would sell for MUCH more, which we are not interested in. 

Our agent is aware that an offer would be contingent on an inspection (the house has been occupied by this family for 45 years and while it's in pretty good shape, I don't know if they've ever really done much work on the guts of the house.)  I didn't consider eldercare programs, that's a great point. Someone else in this thread pointed out that we should approach this as a "parental" figure and try to convince him that we are trying to help, which is not really untrue.  My husband and I are looking for a long-term home to start our own family, we both have elderly parents and are not exactly ruthless businesspeople trying to build an empire. I think this man is going to get a WAY better and more compassionate deal from us than he would from 90% of other people looking at this property, many of whom I think would just move to evict him straight away.  

Buying time with a contingency on the inspection and title search may be a really good way to go, thank you for that suggestion!