questions about tenanted deal on duplex

5 Replies

hi everyone, i am in the process of analyzing a duplex, and I've just learned some new info about and I'm wondering what I'm missing about the implications of the following details: -duplex is tenanted already; duplex is priced quite low for the neighborhood, so interior condition is unknown -property is a duplex via an addition. it was originally built as a sfh. I know it depends on what it looks like inside, but does this spell disaster or extra future expense? -regarding tenants, what are my options? can I simply raise their rent as I slowly renovate? terminate lease? they are paying far under market and cash flow would depend entirely on raising the rent. I'm sure I'm forgetting something, but I was hoping the collective BP hivemind might be able to shed some light on the further risks or implications of thus newfound info on my prospective duplex. thanks in advance!

Hi @David Hald

My primary residence (two family) had a tenant in place in one of the units. After bumping up their rent, they are still living in the unit and it has worked out beautifully. These tenants were on a month-to-month lease, which gave me the opportunity to adjust rent rates. Your situation may vary based on this home's lease status. If you don't know the lease status yet, this would likely be step #1 for you.

Depending on your goals for the home, having tenants in place may be a positive for you since tenants scare away some buyers, leading to less demand. Ask your agent to help you view the interior of the units to make your own judgement. Assuming tenants are home, you will also get a sense of the tenant-landlord relationship. Finally, tenants are also more willing to share actual details of the home if you ask, providing you with even more value.

Best of luck with your analysis!

@David Hald   does what "spell disaster or future expense?" If you are talking about the condition inside, your contract should allow an inspection OR you offer a rock bottom price. 

regarding the tenants you are required to honor any lease that is in place. Get a copy of the lease from the seller. if the seller doesn't have one, verbal lease for example, get a letter signed by the tenants what the terms of their leases are. This is called an Estoppel letter. Also make sure you get the security deposits from the landlord at settlement.

@David Hald To add to what Ned said, which is all great info. Don’t foeget to require prorated rent for when you close. Close on the 15th? Seller pays you half a months rent from tenant. Every dollar yours in date of closing. Read the current lease, twice. Know what you are inheriting.

Wow! Thank you, all, for the helpful info.
I've asked my agent, and he told me the seller has no reason to provide the lease until we put in an offer.
Another question, is upon purchase of the property, what would my options be for replacing the tenants and/or renovating?
Thanks again!!

Wow! Thank you, all, for the helpful info.
I've asked my agent, and he told me the seller has no reason to provide the lease until we put in an offer.
Another question, is upon purchase of the property, what would my options be for replacing the tenants and/or renovating?
Thanks again!!