North NJ · Member since 2015 · 100 posts · 28 votes
Hi. I found what looks like a decent deal on a 2 family property in Brooklyn. The first floor unit is occupied with a month to month tenant. Owner does not intend to evict. Should I pass on the deal, or put an offer? What are some of the risks of purchasing an occupied property?
Realtor · Edmond, OK · Member since 2019 · 123 posts · 79 votes
6y
@Rashad Ellis If it is a good deal pull the trigger! In my experience buying property with tenants in place is not a big deal . What makes this situation even better is that the tenant is on a month to month lease so if you don't like them you can always choose not to renew their lease. Before you purchase the property you will want to make sure you get a copy of the lease to verify that the tenant is indeed month to month.
Really the main risk when inheriting tenants is that a) they have a long lease in place thats under market rent and b) the tenants are poorly managed and do not know the procedures of your company.
99% of the time people are genuinely nice and just want to continue living in their current home.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
I'd ask for a copy of the lease, I don't know what rent control regulations you have for that type of property in your area but those should be factored in.
Realtor · Edmond, OK · Member since 2019 · 123 posts · 79 votes
6y
@Rashad Ellis If it is a good deal pull the trigger! In my experience buying property with tenants in place is not a big deal . What makes this situation even better is that the tenant is on a month to month lease so if you don't like them you can always choose not to renew their lease. Before you purchase the property you will want to make sure you get a copy of the lease to verify that the tenant is indeed month to month.
Really the main risk when inheriting tenants is that a) they have a long lease in place thats under market rent and b) the tenants are poorly managed and do not know the procedures of your company.
99% of the time people are genuinely nice and just want to continue living in their current home.
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
6y
Agree. You just need to figure in the cost of potential eviction.
Have you seen if there is extensive damage inside? There could be costs there to consider and if tenants might be uncooperative regarding letting contractors fix things that can't be put off until they move.
If they're tenants who pay their rent every month, I found most tenants aren't difficult to deal with as long as you are truly empathetic to their needs as a tenant. Like privacy and good maintenance and mostly leaving them alone. And maybe negotiating a break on rent for letting send contractors in, that kind of thing.
North NJ · Member since 2015 · 100 posts · 28 votes
6y
@Aaron K.
My agent contacted the listing agent. According to him, the tenant is month to month with no lease. Bare in mind, I'm in NY which is a very tenant friendly state. And even more so now because of some new tenant laws that went in to effect last year
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
6y
When you have the inspection, go along and see if you can chat with the tenant. We can learn a lot just chit chatting with residents. What you are hearing is probably on the up and up, but better to verify their understanding prior.
We have purchased units with tenants in place. It usually doesn't work out in the long term, but it is nice in the short term to spread out the workload and costs.
Once you close, if you move forward, you would meet with them and put your own rental agreement in place. If we need to raise rent we do it gradually so they have plenty of time to make plans, which may include moving. If you don't get a copy of the application they fill out, create a one page document for them to fill out to gather the most pertinent info. And make sure deposits and move in contidition reports transfer to you.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Rashad Ellis I would not let this deter you from buying the property, just price in the cost of dealing with the inherited tenant and explain that to the seller when you submit the offer. If the tenant is a problem it could be an opportunity to get the place below market value.
Rental Property Investor · Bronx · Member since 2019 · 11 posts · 6 votes
6y
@Rashad Ellis
I’m in the same boat as you, inherited tenant in the BX. His lease ends at the end of the month and from what I can tell, he pays on time and has kept the property right. I didn’t appreciate the sellers agent saying the property would be given vacant and then finding out there was an inherited tenant. I pushed the issue and got the seller to put some money in escrow in the case the tenant is an issue and I need to evict (buy him out with the escrow money).