Purchasing my first rental property- tenant question

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Purchasing my first rental property- tenant question

Doreen Hall
Member since 2019 · 28 posts · 4 votes

Hi-

Wanted to ask if it’s typical to get a copy of current tenant leases prior to having offer accepted and going under contract?

I believe one of the units in the fourplex we are making offer on has several single men living there. They are currently rented far below market rates, and I doubt that a if the tenants are listed on the lease.

Thanks for your advice!

Doreen Hall

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Robert McAllister
Real Estate Agent · Menomonee Falls, WI · Member since 2016 · 54 posts · 45 votes
6y

In Wisconsin, we use Addendum R to request the renter info; lease agreements, amounts, security deposits, and the seller has x number of days to get it to the buyer, and the buyer has x+2,3days to review and reject or renegotiate.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    No, I would say after your have an accepted offer. You should have contingencies to review and approve lease and tenants among other things. If something is not to your satisfaction you could back out or renegotiate price/concessions.

    2Reply
  • Doreen Hall
    OP
    Member since 2019 · 28 posts · 4 votes
    6y

    @John Underwood

    Thanks!

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    A review of the lease agreements is part of your "inspection" or "due diligence" phase. After your offer is accepted, you should have the opportunity to inspect the property. This includes every apartment, every lease agreement, tenant payment history, etc.

    If the written lease states there is one tenant but an inspection reveals two or more, you can require the Seller to remove the unapproved Tenant as part of your offer. They may refuse and require you to buy the property as is. You'll have to decide at that point if you want to accept the potential problem or hold firm on our requirement.

    The DIY Landlord Book4.7244 Reviews
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  • Douglas Snook
    Attorney · Attleboro, MA · Member since 2015 · 414 posts · 165 votes
    6y

    You definietly want it in there somewhere that you get to review all tenant contracts/leases; rent rolls etc and can back out or renogotiate if you see smething you do not like.

    I had a client recently buy a 4 plex and 2 of the apartments had three dedrooms and there were month to month leases with individuals in each bedroom (except one)! At least he had the names and something written for each one when we gave notice. One "tenant" was a sub tenant of another, we had a name but nothing written. The named tenant left when notified but it cost my client $1000 to get rid of the sub tenant (it was cash for keys)

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  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y

    I'd just add that it would be wise to not only have their rental agreements, but to also get the security deposit money.

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  • Brent Paul
    Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
    6y

    You are going to want a copy of each lease as well as the security deposit money.  Otherwise it's a game of he said she said which could be trouble.

    1Reply
  • Robert McAllister
    Real Estate Agent · Menomonee Falls, WI · Member since 2016 · 54 posts · 45 votes
    6y

    In Wisconsin, we use Addendum R to request the renter info; lease agreements, amounts, security deposits, and the seller has x number of days to get it to the buyer, and the buyer has x+2,3days to review and reject or renegotiate.

    2Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    Fwiw plenty of apartments have several all male tenants. So I would not assume there is anything amiss based on that alone.   As an example I rent to college kids - 3/2 townhomes. Lots of times it will be 4 kids sometimes 5 splitting the rent. Check your state laws on legal limits to number of tenants per dwelling.  Usually along the lines of 2 per bedroom plus one 




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  • Rebecca KnoxBusiness Member
    Specialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    Also, besides Addendum R, you can require Estoppels be completed and signed off on by seller and tenants prior to closing. 

    Captain Save-A-Home LLC
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  • Doreen Hall
    OP
    Member since 2019 · 28 posts · 4 votes
    6y

    @Rebecca Knox

    Thanks for your reply-

    Is there a specific estoppel form used for these instances?

    I found out that there are no current leases, so it is not documented about who is living in the apartment with a bunch of single people.

    Thanks everyone for all of the replies!!!!

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  • Doreen Hall
    OP
    Member since 2019 · 28 posts · 4 votes
    6y

    @Doreen Hall

    I found a link to examples of estoppel certificates on another post. Thank you !!

    And thanks everyone for the help! I keep learning.....

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