Buying a MFH with tenants. What should I look out for?

Question

Hi BP, I'm just another newbie with a newbie question what should I look out for before buying a MFH with tenants in one or more units? Proof of lease? Payment history?

Thank you

Andri

Daria B. · Answer

@Douglas Snook

I don't want to hijack this post. I'd like to PM you to discuss what you listed more in depth.

Is that ok with you?

Thanks

Douglas Snook · Answer

I agree with Jim although I don't know about that estoppel letter. You may not be able to do that until you have actually signed the contract and are close to closing or even until after you own it. After reviewing the info from the seller, you may want to write it up and have the seller sign it under oath and give you an indemnity so that it a tenant says later he gave the seller a deposit that should have been held but it was not mentioned by the seller, you can go back after the seller for it.

You certainly want to know from the seller/landlord if there are written leases or if the tenants are month to month. Is there are kind of rental application showing correct/exact names, references, who should be living in the apartment.  Is the seller holding any kind of security deposits or last months rents (can vary by state) Is anyone behind, has the seller started any kind of evictions against any tenants. Are there any outstanding inspectional services issues pending or any other kind of lawsuits, like a slip and fall.

Also as mentioned, what utilities or other services are being provided by the seller as opposed to the tenant. For example, does one tenant pay less because he cuts the grass or shovels snow.

Buying a MFH with tenants. What should I look out for?

Most Popular Reply