Real Estate Agent · Winter Park, FL · Member since 2018 · 86 posts · 35 votes
I JUST closed on a flip I had a lot of money into and am looking to buy my next deal. This time I'm looking for a cash flowing, long term hold to rent out. I found one that needs some rehab but will cash flow, HOWEVER there is a potential snag... there is an existing tenant, with no lease, that pays under market rent (about $400 under market). The listing agent said they are willing to sign a lease if the carpet gets changed out. I'm asking if they would be willing to pay more (currently paying $1000, market rent is $1400 for this property). I'm worried about the implied lease since they've been there for 15 years and also not sure I want to inherit a tenant...
Anyone have experience with dealing with a long term (15 year) tenant with no lease on a property they're buying? What are the options/laws and is this a GO or NO GO? Would especially appreciate feedback from Floridians that are familiar with our state's tenant/landlord laws specifically related to implied leases.
They are simply, by default, on a month to month lease, as per state,as. It doesn’t matter if they’ve been there 15 years or 15 days....give proper notice to terminate, 20-30 days, then rehab and rent to someone for market.
That's a pretty large jump. And, even if the tenant can afford it...which is a big "if"...he'll probably be resentful about it.
I'm not in FL, but recently had this issue in New Orleans. I bought two duplexes that are next to each other (same seller). Basically a slumlord situation where he let these properties deteriorate for years. I suspect rented to whoever had cash in hand at really low rates, so no one bothered him with maintenance issues. No leases, though I did get estoppel agreements. Everyone was month-to-month. Heck, he didn't even have keys for the units. Only the tenants did. No way was someone like that going to go to the trouble of vacating tenants for a sale. But that's okay. It's one of the reasons I got these babies on the cheap.
One unit was vacant at closing. The other three were inherited tenants paying $500/month for rents that should have been $750/month. Even with their poor condition. And $1200/month once fixed up. One of those tenants had been there for 20 years.
For this situation, I didn't even give the option for the tenants to stay for a higher rent. I would have doubled it and I highly doubt anyone could have afforded that. Plus, for the kind of renovations I wanted to do, it would have been tough to do with people living there. Instead, I closed toward the end of June and gave everyone a Notice to Vacate by July 31st.
Oh, but of course. 2 out of the 3 tenants don't pay their July rent. Including Miss "I've lived here 20 years and always paid my rent on time", mmm...hmmm. Nor did they leave when I posted the Pay or Quit. Evicted both sets for non-payment of rent and they were gone by July 29th. The third tenant pushed it about a week past their deadline. But we could see they were in the process of moving out and didn't make an issue about it.
A pain while it was happening, sure. But was about what I expected and it is so much nicer to start with a fresh slate.
@Jennifer T. I'm glad I know this now! The day after I posted this the property went pending... I guess someone else saw the deal that it was! Thanks for sharing, because now I know on the next one... :)