Dealing with evictions

9 Replies

Hi Everyone,

I'm curious to get feedback from other investors who have had to deal with evictions of someone you did not put in the house to begin with.  I have a flip I'm looking at that currently has a tenant in there who will need to be evicted.  The seller wants to sell "sight unseen".  On paper I have vetted the numbers, they all make sense.  However, I have heard that evictions can be long and time-consuming.  I'm new to this so I don't know how big or not a big deal an eviction is.  If this were your deal, would you offer less if the house comes with a tenant that needs to be removed?  If so, how much less do you offer?  Would you stay away from the deal altogether?  I'd love different perspectives on this. Especially from those who have experience with the scenario.

Evictions are different per area of the country.

Before considering doing an eviction and messing up someones credit or background check, I would have a conversation with the tenant who is getting caught up in this and explain the situation. Give them a reasonable date they need to be out maybe offer cash for keys. They leave on time and leave the house empty in exchange for some amount of money. This will benefit everyone and be faster than an eviction.

Now to the buying sight unseen. That is fine but you have to factor in worse case on the house and the offer has to account for that. I'm sure they are trying to not upset the tenant by letting them know the house might be sold.

Ask if you can see the house under the premise that you are part of an annual inspection or something similar. That way you don't upset the current tenant until the house actually sells.

Then treat the tenant with respect and work out a reasonable solution for them to have time to find a new place to live. This does not mean filing an eviction on an unsuspecting tenant and blind siding them with this.

An eviction in Texas will take +-21 So it is not a long process 

The question is, under what grounds will you be evicting? Is there a lease agreement in place?  Are they behind on rent?

Keep in mind you just can’t evict because you want possession of the property.  If the lease is month To month, you will need to give the occupants a 30 day notice 

@Mauricio Quintana   well 1st off, each state is different, In Cleveland I get them out in about 45 days or so. However if this tenant has a lease, you simply cannot just throw them out. Also you are not getting in ? MAKE SURE you assume it needs everything when making the offer. ALSO have someone knock on the door. Even if you do not get in you can peak , and usually get a feel if the place is trashed or not. Walk around the property, etc. 

Good luck 

Originally posted by @Mauricio Quintana :

Hi Everyone,

I'm curious to get feedback from other investors who have had to deal with evictions of someone you did not put in the house to begin with.  I have a flip I'm looking at that currently has a tenant in there who will need to be evicted.  The seller wants to sell "sight unseen".  On paper I have vetted the numbers, they all make sense.  However, I have heard that evictions can be long and time-consuming.  I'm new to this so I don't know how big or not a big deal an eviction is.  If this were your deal, would you offer less if the house comes with a tenant that needs to be removed?  If so, how much less do you offer?  Would you stay away from the deal altogether?  I'd love different perspectives on this. Especially from those who have experience with the scenario.

 As others have stated this is very state specific.  I have done 3 evictions, and two of them were inherited tenants.  For me, buying a property with tenants in place is a wildcard.  The existing tenants are ALWAYS a problem in my experience, when the new sheriff imposes rules that were absent before.  (Typically, the MF properties I find for sale are where the owner has lost control of the tenants and just wants out.)

As part of my pro forma, I build in a conservative percentage for vacancy in the first year after closing, as well as the cost of eviction for tenants who may be an issue.  (You can usually tell early on in the buying process who is going to be a problem.)

Every property is different, but as a rough estimate - if I were buying a fully occupied 4-unit property, I may anticipate a 25% vacancy loss, $2000 for an eviction (which includes loss of rent during the process), and some amount (in the $1,000's) for deferred maintenance on turnover.  These numbers are totally a model, but you can evaluate each component based on the relative risk in your situation.

Regarding eviction, I would recommend starting it sooner rather than later, especially with inherited tenants, who will challenge you until you demonstrate control of the property.  Most new investors make the mistake of waiting too long to start the eviction process because they are afraid of the cost.  It's often cheaper to do the eviction earlier, since the eviction will always cost X, but the further behind you get in rent collection is often money you will never be able to collect.  I would also use a lease that allows you to collect attorneys' fees for eviction proceedings as well, so if the tenant looks to cure and stay by paying up, they will also have to pay your costs.

Good luck!

As others have stated, it is highly state/area specific as to how long or how easy/hard it is to do an eviction. I'll repeat also that you need to consider if it is a month-to-month tenant or how much time is left on their lease.  On month-to-month, I assume you'll need to give them a 30-Day Notice to Vacate.  But if there is more time than that left on their lease, you can't necessarily make them leave just because you'd be the new owner.  They would have to agree to it, which is typically done by offering them cash for keys.  However, if they haven't paid their rent after you own it, then you would follow those eviction procedures.

I just closed on two duplexes around the end of June.  They need substantial reno.  There are tenants in 3 out of the 4 units paying substantially below market rent.  I hoped for the best, but assumed I might have to evict all of them and did include those costs into my rehab numbers.  I gave all the tenants a 30-Day Notice to Vacate on the day after closing (they are all month-to-month).  I also included an intro letter that their security deposits had been turned over to me, along with a reminder that security could not be used for last month's rent.  It also had verbiage for the things I could do to help them with their move-out.  For example, with July's rent paid in full, I'd return any pro-rated portion if they moved out before the end of July.  I promised them a quick turnaround with their security deposit, assuming no additional damage from when I'd been there for the inspection.

But none of that mattered.  July 1st came around, which is when two of the tenant's have their rent due, and neither one paid.  We posted 5 Day Pay or Quit notices on July 3rd.  Still no payment and no one moved out.  Filed for the evictions on the first business day we were legally allowed to.  And court date for both of those is next Monday (July 29th).  We'll win and they'll need to be out by noon the next day.  If they're not, then it can take another 1-2 weeks to schedule a sheriff's visit.  That's about the anatomy of what an eviction looks like where I live though your mileage, especially on timelines, could vary a good bit. 

You might want the full background check on the renter to see his history, such as if he is prone to violence, and also make sure you can insure the house sight unseen with a tenant in place.  Some insurers are ok with this other not.  You definitely want the insurance to start with the purchase, not the vacancy.

 @Mauricio Quintana I am in Texas and I bought a home with someone that I did not put in there. Something you not disclosing in your story: does this tenant have a written lease? You buying the home does not cancel out a lease. Whole different playbook at that point. 

If your looking for a quick-flip, then you will want to sell higher to some one that is going to live in the home (buyers that are users pay more than investors in any kind of real estate) 

I would in any case pay a fixed fee amount to a hungry young attorney to do your eviction, if you even can evict. 

Originally posted by @Charley C. :

 @Mauricio Quintana I am in Texas and I bought a home with someone that I did not put in there. Something you not disclosing in your story: does this tenant have a written lease? You buying the home does not cancel out a lease. Whole different playbook at that point. 

If your looking for a quick-flip, then you will want to sell higher to some one that is going to live in the home (buyers that are users pay more than investors in any kind of real estate) 

I would in any case pay a fixed fee amount to a hungry young attorney to do your eviction, if you even can evict. 

Squatter vs written lease are also very different situations. I've seen Tenants extend for a year or more. Expect to pay around $1,500 if you hire someone. More for County Court appeal. Whatever you do, don't seek self help and try to shut off power, remove doors, etc. Dangerous and highly unlawful.