Quadplex has two evictions a week from closing. Help!

9 Replies

Hello,

I am closing on my first deal a quadplex in about a week. I am very excited. However, if found out that . Units will be vacant. They are eviction both this week. One unit was expected to be vacant, I am using fHA and this unit had a tenant that was known for not paying rent on time. Other one has been arrested and only been there for a month. Area isn't bad but not great, c class. Now the seller said that they will clean both units and get them rent ready. I have final walk through next week. Is there any way I can make sure they're rent ready beside asking? Are they required to even make it rent ready. This is a FHA loan so I'll live in the worst one and make repairs if necessary.

After closing my PM will start looking for applicant and lost picture. My question is has any one been in a similar situation? Any advice? How can I make sure it really is rent ready at closing. When I buy the property do I get the evicted tenant security deposit and can I use it to make the unit rent ready?

I mean it’s better to have vacant units than tenants in units and not paying. The question of if the units are rent ready or not should be an easy one. Would you live there? If yes then you can probably rent it if no then what needs to be fixed for you to rent it. Before the walkthrough checkout the condition of other available apartments in the area so you know what your competition is. 

They are not required to do it, but if they offered, take it. I would not assume they will do a good job. I would see it as an opportunity to improve the vacant unit and increase the rent in that unit. You will live in the other one, so that one doesn't matter. 

Hey Robert,

Don't worry.  A similar situation happened to me on my first property (a quad too, no less!).  It was marketed as "fully rented"...and it was, but prior to closing the following happened:

1st (about 20 days from closing):  While reading the appraisal report, I noticed the photos from one of the units looked unoccupied.  When I asked the seller, they said they were evicted a few days earlier and that they would make it "rent ready".  This was particularly frustrating as this unit needed a ton of renovation and I was not expecting to be in a financial position to deal with that right off the bat.

#2 (about 11 days from closing):  I get a call from my agent stating the the seller just received notice that the tenant in unit 4 (who was month to month at that point) just gave their 30 day notice and they would be gone 15 days into me taking ownership of the property.

#3 (AT THE CLOSING TABLE!):  After the wire transfer from my bank was complete, the seller tells me at the closing table that the tenant in unit #2 requested to break their lease that morning.  I hate to think the worst of people, but I KNOW he purposely waited until the closing agent came in to tell us the wire cleared before telling me.

So, what was supposed to be an exciting time for me instantly became a pressure cooker.  

But, like I'm sure you others will reply as well, you are better off to start off fresh with these vacancies as inherited tenants can be a huge pain in the butt.  You have no idea what the seller's screening standards were and what kind of tenants you might have been dealing with.

Now you get to do your own screening of tenants - I'm sure you already know this can mitigate so many headaches as a landlord if you screen your tenants well.  I know it doesn't seem like it now, but this is a positive thing.  

Good luck man, and let us know how everything turns out when the smoke clears.  I'm sure you'll be great.

@Jonathan Bombaci That is a great point, would I live there to tell if it is rent ready. And I'll check out my competition. I'm a little concern because there are a couple of units up for rent with cost less and more than my rate.

@Anthony Dooley Yeah that is true that I will live in one and can increase the rent. Yeah if they are offering by all means!

@Michael Walton WOW that is very unfortunate. Sounds like a nightmare to navigate through that on your first deal! Especially at closing too. I see now that vacancy are a pain and so are inherited tenant too. If you don't mind me asking what type of area is your in? Mine is "C" class so fairly lower income area. Definitely, not somewhere one of my peers would stay (fresh engineer from college). I am concern it may be hard to find renters cuz I see a couple that have been on the market on zillow for 15-30 days.

I would consider that as a blessing to have a clean slate when you move in,  you dont want problematic tenants on your first property. 

Hey - Sorry for the delay in replying Robert.  

It's in a C class area, but what it has going for it is it is also very close to a major university - meaning it gets a lot of interest.  The units were all recently remodeled as of a few years ago, so I'd call the building as a whole B-.  We stay on top of leasing and we've never had an issue with vacancies outside of a few days a year.

Originally posted by @Robert Hernandez :


@Michael Walton WOW that is very unfortunate. Sounds like a nightmare to navigate through that on your first deal! Especially at closing too. I see now that vacancy are a pain and so are inherited tenant too. If you don't mind me asking what type of area is your in? Mine is "C" class so fairly lower income area. Definitely, not somewhere one of my peers would stay (fresh engineer from college). I am concern it may be hard to find renters cuz I see a couple that have been on the market on zillow for 15-30 days.

 

@Robert Hernandez

First, you will not get any damage deposits or rents at close for those two empty units. Since the situation has changed since the Purchase Agreement was signed you may want to delay close if it’s not what you want. Do a final walk through the day before close. If the units are a mess or need money to fix, I’d ask seller to fix those items. If it’s nothing major, go ahead and close and move forward with finding tenants. You could always ask the seller if you can advertise for rent now (with no showings or applications accepted until after close).

Most importantly, verify both of those tenants are moved out prior to your close. You absolutely cannot close and accept two tenants in the middle of an eviction.

Updated about 2 years ago

Update: If the units are empty but a mess on final walkthrough, you could always still close but ask for concessions/dollars at close to make the units acceptable for rent. That way, you control what is "acceptable" or not.

While stressful now, I think you’ll look back and be happy the evictions happened before you took possession. I can imagine many sellers would turn a blind eye and let you deal with it after closing.

Now you can vet your own tenants and get some good, on-time-paying tenants in there.

Good luck!