Hello, so my wife and I have been in the process of buying our first investment property (Duplex) so that we could live on one side while renting the other side out. The closing date is 9/19.
However, today I ran into troubling news where the previous tenants of the side we are going to be living in have died. The mother died of drug overdose as well as her 2 year old child (most likely took his life with her, as she committed suicide). This is most likely the reason why the seller is selling it. (Doesn't want to deal with investing after this incident perhaps?)
First of all, this is insane! This is in the town of Grimes Iowa (which is a very good district/neighborhood) and something like this never happens here.
My questions:
1) Should I be concerned about this, from an real estate investment standpoint? (ex: news like this will make it hard to rent out in the future).
2) If I wanted to back out of this sale, would it be legal to do so at this point? (Currently being appraised and underwritten).
Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes
10y
You might want to walk around the neighborhood, introduce yourself to some of your neighbors and let them know you're thinking of purchasing that property. If no one jumps forward to let you know what happened, then you're probably safe... and if the opposite happens you know your future tenants will know all the gory details 5 minutes after moving in.
Property Manager · Grants Pass, OR · Member since 2009 · 429 posts · 201 votes
10y
Niel, that is crazy and unfortunate. Some renters will care about this sort of thing, others won't. Sure thing though anybody who moves in there is going to eventually get to know their neighbors and the story of "did you hear what happened in your house" will circulate. It won't be able to kept secret.
If you do want out, your offer probably has an inspection clause or other outs. I would discuss that with your realtor.
Investor · Des Moines, IA · Member since 2014 · 44 posts · 33 votes
10y
I'd heard about this story, really sad, but I wouldn't be too concerned about it from an investment standpoint unless it creeps your wife out significantly. I think disclosure laws only apply to sales, not rental agreements.
If any potential tenant is aware of the story, it's doubtful they would know the address where it happened. Good luck, I think the duplex house hack is a great strategy!
Investor · Indianapolis, IN · Member since 2013 · 80 posts · 64 votes
10y
So sad to hear that news. These properties we deal with all have their stories. I try not to overthink them too much and move along to focus on the economics of things. (And I can understand if you personally wouldn't want to live there. At least not right away.) That said if it's a good deal, press ahead! The house hasn't done anything wrong. There are discussions where investors matter of factly advise on dealing with rotted corpses, smells, drug dens, etc. Goes with the territory.
Investor · La Grande, OR · Member since 2014 · 194 posts · 176 votes
10y
Hello,
I know in some states you have to disclose that type of incident if a tenant inquires (not in Oregon where I live) but I have run into very few people who have ever asked, so I assume you won't have an issue with it. People's memories are short, and very few, if any will have ever known the address of the incident anyway.
Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes
10y
You might want to walk around the neighborhood, introduce yourself to some of your neighbors and let them know you're thinking of purchasing that property. If no one jumps forward to let you know what happened, then you're probably safe... and if the opposite happens you know your future tenants will know all the gory details 5 minutes after moving in.
I've never had a prospective tenant ask if anyone has died in the apartment, so it's probably not an issue from that stand point, but the neighbors might bring it up. I would probably move ahead on the deal.
Residential Real Estate Broker · West Des Moines, IA · Member since 2014 · 7 posts · 3 votes
10y
I feel that it is not a long term issue. Time has a way of solving it. There is no disclosure required, and it would not give you justification to backout. You could try to see if the seller would lower sales price or add concessions. The seller would not be obligated, but you could scare them into. Worth a try, if fails, proceed to close
I do think it hurts the value, or would make it hard to lease.
Humboldt, IA · Member since 2013 · 58 posts · 5 votes
10y
I heard about this story out here in Humboldt. I think it would be beneficial to give the seller maybe a little longer to reconsider. see if they can extend the closing date. I would disclose what happened only if it's brought up. I seriously don't remember the news saying the address of the place.