I'm in the process of purchasing my first deal via wholesaler. The property is a duplex and already has tenants placed. We'll be doing a walk through today, during this timeframe what are some other questions I should be asking the owner? Property's income statement? Full repair list? Any and all suggestions are welcome.
@LaQuinn Bolling You might need a tenant Estoppel Letter from seller, Sellers disclosure document. I would like to know if tenants make payments on time or not. Check out the lease agreement as well to see when the lease expires and what the deposits are if any. Hope this helps!
The estoppel comes later during the inspection phase (see explanation below).
I would ask for a list of repairs and/or upgrades since they've owned it. How long have the tenants occupied, what they pay for rent, do they have any deposits, are pets allowed (or have they ever been allowed), who handles lawn care, what does the owner pay for utilities, have there been any lease violations or noise complaints, do the tenants pay on time...
Those are some examples. Here's the estoppel information:
Your offer to purchase should include a requirement that the seller provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel certificate is a form filled out by the tenant and then confirmed by the Landlord. It's supposed to ensure there are no surprises after closing. For example, you buy the place and the tenant could claim the Seller allowed them to paint the walls black or that their security deposit was twice what the Seller claimed. How will you know? An estoppel certificate fixes this problem.
Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.
Here is an example and explanation: https://eforms.com/rental/estoppel-certificate/
Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.
Thank you both for the quick responses and I apologize for the late reply's. These posts are helpful and I'll make I incorporate both throughout this process.