Investor · Hamilton, OH · Member since 2013 · 139 posts · 27 votes
hello BP
I am considering purchasing a property that is currently a rental. Not sure how the lease is written up between existing Tennant and LL. But I know they are behind on rent.
If I buy the property what are my options. force them to sign a new lease? Evict and start fresh with someone I have vetted? Or am I bound by some else's lease?
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
11y
If the current tenants are behind on the rent have the current owner start eviction procedures. If they do not, you must have a copy of the current lease, the tenant's application and the rent roll. This is material to your purchase offer. If you are planning on buying a problem your purchase price should be reduced so that you are well compensated for solving the problem.
Residential Real Estate Broker · Fort Wayne, IN · Member since 2014 · 171 posts · 116 votes
11y
When we purchase buildings with tenants we are obligated by law to honer the existing lease terms and our lawyer has recommended the privious landlord assign the leases to us.
If you are buying a building that has no lease agreement or simply a verbal agreement you could be looking at a legal nightmare.
Flipper/Rehabber · Nashville, TN · Member since 2013 · 76 posts · 3 votes
11y
I actually just purchased a duplex in the same situation. One side is vacant and the other rented. The current tenants were on a week to week lease with the previous owner. I signed them into a 12 month lease today. They have been consistent with payments with the previous owner and I hope it hey continue.
How far behind are you tenants? How long have they lived there? Have you had any contact with them? How was the property previously managed? I feel like there are a lot of factors to decide in a situation like this.
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
11y
If the current tenants are behind on the rent have the current owner start eviction procedures. If they do not, you must have a copy of the current lease, the tenant's application and the rent roll. This is material to your purchase offer. If you are planning on buying a problem your purchase price should be reduced so that you are well compensated for solving the problem.
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
11y
@Jeff Rabinowitz put the puck in the net on this one. If you know at the time of offer that the tenant is in violation of their contractual obligations - particularly if this is a continuing ore recurring behaviour, have the Vendor deal with the eviction as a condition of sale.
Investor · Hopkinton, MA · Member since 2015 · 53 posts · 28 votes
11y
The others have said it well. Do you really want to purchase a property with a known bad tenant (who might well be the very reason the property is for sale)? If so, you need to have a solid, practical understanding of your landlord-tenant laws to understand what you are getting into cost-wise, time-wise, and angst-wise. Do you really want to close on the property with that tenant still in place? If so, do you have the resources to fund an eviction and all its collateral expenses while continuing to pay the carrying costs of the property? It's wise to never underestimate the cost of an eviction (or an ongoing bad tenant), particularly if you are in a "tenant friendly" (what a great term) state.
You might consider making your offer subject to the seller removing any tenants before closing. That's how I do it nowadays for residential deals, although I concede others may disagree because they have more of a stomach for it. But too many years of unfortunate experience as a landlord/investor in my state has brought me to this conclusion.
Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
11y
@Roy N., being a long time Wings fan your post brought me a smile and I thank you. However, I was always a goalkeeper when we played hockey as kids. I don't believe I have ever put a puck in the net. It is too much fun keeping it out.
Property Manager · Pittsburgh, PA · Member since 2012 · 267 posts · 136 votes
11y
Make your offer contingent on the property being vacant. If the current owner has conditions in the lease where they can give set notice for them to leave this will save you a lot of money and hassle.
Make your offer contingent on the property being vacant. If the current owner has conditions in the lease where they can give set notice for them to leave this will save you a lot of money and hassle.
I agree with Eddie and the others: ask for vacant property. I have bought properties with tenants in place before, but even if it is a "known good" tenant, it is always a risk. Here, you know for a fact that its a bad tenant situation - don't inherit someone else's problem - unless you are very handsomely compensated for it!
@Roy N., being a long time Wings fan your post brought me a smile and I thank you. However, I was always a goalkeeper when we played hockey as kids. I don't believe I have ever put a puck in the net. It is too much fun keeping it out.
Jeff, in that case perhaps we should reserve the "put the puck in the net" expression for when you give BAD advice?
Semmes, AL · Member since 2015 · 21 posts · 7 votes
11y
Not only should you have the current owner evict the tenant you should have the current owner be responsible for any damage the current tenant may infliction the property.
Don't hold up a good deal if the former owner can't get the tenant out soon or hasn't even tried. Solve their problem for the right price. :-)
Another thought... often a tenancy can be saved with better property management. Be really good at managing your properties or hire a PM company that is.
You will need to honor the current rental agreement or else by mutual agreement change to a new one. When we've bought occupied properties the tenants always agreed to change to our rental agreement. The best tenants stayed and the undesirable tenants left on their own after becoming aware of our management style.
Perhaps there will not be a need to evict. Find out as much as you can in advance about the current tenant and the reason behind their not paying rent. Turn the situation around if you can or offer "cash for keys" as an alternative to eviction.
Investor · Hamilton, OH · Member since 2013 · 139 posts · 27 votes
11y
thanks for alll the great replies. I knew I could count on BP.
It seems like I need to follow up and ensure the details of the current lease (if there is an existing one) and find the best course of action.
I know Tennant is behind and current LL is not wanting to go through the time/expense of eviction. This will certainly be addressed in the offer.
If there is one, I will prob follow that lease until it's term is up or eviction is needed. If there is No lease, I will have Tennant sign my lease and proceed from there.