I've been scoping out some duplex properties and I've finally found one I'd like to purchase. My realtor tells me it's occupied on both sides (my understanding is that they both have a year lease). He suggests I buy the property, pick a side I like, review the leases, and give one tenant a 30 day notice to vacate.
1) Is this legal??? I have no idea when their leases end, but it seems they'd have to honor the current lease, or at least have the right to stay till the end of the lease. (Unless the lease becomes void if the owner sells the property)?
2) If it is legal, is there some moral line I'm crossing?? I realize it's a business and an investment, but has anybody had the awkward/unpleasant experience of kicking someone out before moving in??
New to all of this.. I know people do it everyday but it seems like kind of a low blow.
Thanks BP !
I'm no lawyer but I'm under the impression that the lease transcends owners and must be honored even if the property changes hands. Everything I've read comes to this conclusion.
Yea, I'll have to clarify the terms...maybe I'll get lucky and find out the lease is up in a couple months haha
Your agent should be able to find out the lease terms from the selling agent with a phone call. Most of the time the lease terms are actually on the RealTracs buyer listing report. It should say something like Monthly or Yearly. If either tenant is on a monthly lease then you should just be able to give a 30 day notice to vacate once you close on the property.
I'm pretty new at this as well but I've had to go through a few agents to find someone knowledgeable about rental properties. Most agents are used to people buying personal residences. I would recommend finding a good agent that's already knowledgeable about finding and evaluating investment properties.
The number one most important thing though is to run the numbers. I've had agents recommend paying too much for a property. Even if you have a good agent you should still run the numbers to make sure the deal works for you.
That's a good idea man. Just checked, it's listed as yearly. Unless the lease just happens to line up with my moveout date, might have to pass on this one.
Your instincts are correct, you have to honor the lease unless you can find a material reason to evict, and then its going to cost you. Better to find a different property if you cant wait until one of the leases is up. Agent should definitely find out when the leases end so you can decide. If they are struggling with simple things like that, I would find another agent. If you find one that also does property management then they should be familiar with investor relations as well. Still doesn't guarantee they will be great, but is a good starting point.
Thanks for the advice, think I'll let this one go. Patience is a virtue..lol
That it is!
I was listening to one of the older BP podcasts today (maybe 17?), working my way through them during drive time, and @Joshua Dorkin was saying how real estate is often slow and steady, not the fast paced excitement that non-investors often picture. The most successful investors seem to be those that find what works for them and repeat it over and over to scale up.
Not sure what your deal looks like, but most people I know in Nashville are having more luck finding properties that "math out" from sources other than agents and the MLS. Not many great deals there from what I am seeing in Nashville.
Good luck with your investing!
If you really think that property is a good buy and the math adds up I would buy it solely as a rental property. It may be difficult to line up your lease with a property purchase unless it's a single family home. @Tom Shepard is right about current inventory, it's difficult to find any good deals on the MLS right now. You really have to low ball the seller to make a deal profitable. I am looking at a few places on the MLS now but none are even close to what I would need to offer to make the deal work for me.
I feel like the Nashville market is peaking right now in terms of cycles. We have low inventory and everyone is overpaying for properties.
@Mark Douglas read the current leases, typically in a lease there is a line that states if the property changes hands they could terminate the current lease with notice. We just did it with a property we have under contract
If you can't just break their lease, you could always ask the tenants if they'd want to move out. For all you know, they would love to move now, but feel stuck in their lease.
Another option is to offer them cash for keys.
I came here to mention the cash for keys option too. I heard someone talk about it on one of the BP podcasts.
If it's a really good deal, it might be worth paying the tenants to move out early. You'd have to see if the numbers work.
Yea maybe I'm moving a little too quickly here..back to the drawing board !
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