Possible problem tenant when purchasing new rental property

[Matthew Carlton]

I stumbled across a property on Facebook of a granddaughter helping her grandfather selling a property. No pictures but the posted price got my attention. To make a long story short I set a time to look at what I thought was a SFR but when I pulled up it was a Triplex. 1- 3 bedroom unit and 2- one bedroom units. Both one bedroom units occupied. The large unit needs no more thank 10k to repair and update to be and to rent, as well as some issues I would address in the future. After meeting with them owner that is 80 something said look I know it needs work. If you give me 30 thousand you can have it. 15k less than posted and under half appraised value. He has various other properties and businesses so doesn't need the money. Once fully rented it would easily bring in 1700 months. Had an inspection done and other than roof will need replaced in 5 years and minor issues that I expected.

Note I don’t have rentals but was a goal in the future.

One of the tenants I am concerned about signing new lease with. Constantly late on rent which current owner is completely fine with as well as just has a flat out attitude when we met as well as was difficult allowing me to walk her unit. The one positive is she has been renting same unit for 17 years. I am new to this and need some opinions from others with more experience.

Thank you

[Will Fraser]

HI @Matthew Carlton!  This is an interesting and appetizing situation.  In my opinion the "deal" offered for the property justifies the potential drama.  If this older man is a savvy businessperson then he is well aware of the value of the property, the potential issues with the tenants, and the "right price" for someone else to deal with those headaches.  

Depending on the tenant-landlord act in your area, this could be a simple issue to remedy or a far less simple one.  If the older man has a lease with the tenants, then you would inherit the lease and don't have an obligation to renew it when it ends.  If he does not have an active lease but has received money periodically then he has one of a few different types of leases with the tenant.  This, again, may be simple or not simple to remedy. 

Sounds to me like this could be a good deal, provided that the owner gives you sufficient time before closing to review the leases (or lack thereof), speak with a savvy property manager or real estate attorney about the implications of those leases, and have all of the prudent documents in place BEFORE closing on the property.

Preparedness beats luck 5 times out of 10.  (ha)