Hey Investors. I'm writing an offer ( NH property) on a two-fam with tenants in place. I may or may not want to keep the current tenants. How does this work in terms of contingencies in my offer?
Ideally I'd like to screen the current tenants and transfer their lease into MY lease on the day of closing if they pass my criteria. Can I do that? I know I can make my offer contingent on the property being empty, so why couldn't I make a contingency that says I have 10 days after the home inspection to screen and ensure the tenants will agree to my lease terms? Or something like that.
Don't tie up the deal based on the tenants. That kind of contingency is unnecessary and could delay or even break the deal.
Tenants in place are easy to deal with. Just don't make too many changes or demands of them right off the bat. You must honor their current lease unless there is mutual agreement for them to switch over to yours. When we buy a tenanted property, the first thing we tell tenants is that we aren't going to raise the rent at this time. That puts them at ease and opens the door for cooperation and negotiation. We introduce the tenants to us, our management style and our rental agreement. Good communication from the start is key. Let the tenants know what to expect. Then get working on catching up on all deferred maintenance. Win the tenants over, and you will be surprised at how easy it can be. Bad tenants tend to move out on their own when good landlords demonstrate they are attentive to the property and what goes on there. Good tenants become even better when you tend to their needs and show them respect.
You could try to create contingencies, but that's too much of a hassle and could make you lose the deal.
Ditto. Plus, the tenants have not given legal permission for you to see their financials/credit info.
The tenants kind of don't have a choice, I could ask to receive the property empty, so nicely explaining to them that I'm going to screen them and then transfer the lease doesn't sound unreasonable to me. That's my thought anyway.
With regard to potentially losing the deal, I think you are all right it could spook or aggrevate both the seller and the tenants. But I worry about inheriting headache tenants, so much so that I kind of don't want to buy unless I at least get to meet them and do a check to make sure they pass my criteria.
Don't other investors get freaked out by inheriting tenants they know nothing about or is that just me? I may be scared more than I should be because I've never inherited tenants before?
Asking to receive the property empty will delay your closing, the current landlord still must follow state laws for removing the current tenants. Providing proper notice. If any issues come up that could delay everything.
I would ask to see current leases and any credit screening approval type of forms should transfer to you as new owner. you should ask for paperwork for the past that covers those tenants from when they moved in.
I wouldn't see a problem with inheriting those tenants just make sure you as new landlord are aware of state laws for rental in your state. Have new leases ready that transfer terms to you to match what they have now. You want all leases as soon as you can to reflect that you are landlord so get those prepared and ready for them to sign once you close. Closing doucuiment should prorate rents and transfer security deposits to you date of closing.
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