Exiting tenant is not paying rent

11 Replies

The seller just provided us the financials and rent rolls for the current tenant. She has not been paying for the past 7 months. Per my agent, the seller said that the tenant stop paying because she informed her that she was selling the property. What should I do now? The tenant lease ends March 2020. Should I still go head with the deal? I need your help.

Account Closed - If the deal makes sense and is cash-flow positive if the tenant were paying, then I would proceed. I may attempt to renegotiate with the seller for the amount of rent you may not be able to collect based upon how long it takes to evict a tenant in your state, plus the cost of an eviction. I would also tour the property and inspect that unit closely to see if there is any tenant caused damage present that needs to be a part of that renegotiation.

But most of all, MAKE SURE that ALL of your communication with this tenant from day one is professional and positions you as an experienced landlord who is totally knowledgeable of procedures and laws. In so doing, you may find that they start paying upon being made aware that you are the new owner. And if not, proceed with all required notices and evict as soon as you are able to do so.

Alternatively, you could require the seller to provide possession of the property in a vacant state, as they may be in a position to evict in a shorter period of time than you, since the tenant is apparently 7 months past due, which may no longer be considered the case once you become owner.

I would probably go the route that @Jonathan Taylor Smith suggested and require the seller to provide possession of the property in a vacant state. I would also likely ask for a reduction in the price. Have you tried asking the seller why they have allowed the tenant to live for free for 7 months? 

On a separate note, have you had a chance to view the inside of the property? The tenant's disregard for paying rent might also lead to a disregard for the property itself. This could lead to a lot more rehab than a typical turn on a normal property. 

The money that the tenant owes the owner is the owners problem.

You can take the house with the current tenant and lay down the law. Send them a notice to pay rent or you'll be filing an eviction within X days. Tell the tenant this will effect her credit and the ability to rent another house.

If they don't pay evict them. 

Get a discount on sale price to cover expected legal fees.

This will be a great learning experience on how to deal with a non paying tenant.

Notify the tenant - in writing - that you will expect them to abide by the lease or evict, period. If they screw up, hit them hard and get rid of them.

@Jack Medford

Thank you for your advise. I have not ask the seller that question yet. However, to my surprise, the apartment was very clear and in good condition. I did my inspections this past Friday and everything went well. I also told my agent I need the property vacant or the seller can reduce the price during the 12 months I may not get pay, eviction fees and lawyers fee. We are waiting to hear from the seller before we move forward.

Like everyone said the goal would be to get the building with no headache tenants, but tenants come and go like the wind, so I would never base my decision to purchase a building on the current tenants, 

because next year there is a good chance you will have all new tenants anyway. 

Originally posted by @John Underwood :

The money that the tenant owes the owner is the owners problem.

It sounds like the current owner is not going to go after the tenant for this month. The new owner should be able to have this debt transferred over to him in the sale. Now if the new owner needs to evict, he can sue her for all the back missed rent, not just what was accumulated while he owned it. It might be a nice bonus for the new owner.

Originally posted by @Greg M. :
Originally posted by @John Underwood:

The money that the tenant owes the owner is the owners problem.

It sounds like the current owner is not going to go after the tenant for this month. The new owner should be able to have this debt transferred over to him in the sale. Now if the new owner needs to evict, he can sue her for all the back missed rent, not just what was accumulated while he owned it. It might be a nice bonus for the new owner.

 Deadbeat tenants are nearly impossible to get any money from after an eviction.