Rental Property Investor · Altoona, PA · Member since 2020 · 22 posts · 4 votes
So I’m looking at an ideal split level conversion property. But, I don’t want to run the risk of sitting with a vacant property for two months after I purchase. It’s move in ready and rentable.
To give myself ultimate comfort I want to advertise and “verbally” confirm a tenant or two.
Is this illegal in PA? Is it risky? Need tips. I can pay the mortgage without a tenant BUT how nice would be it to have rent to pay for the mortgage and help you get over the closing costs right away?
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
6y
This sounds like a terrible idea from a practical standpoint. So much can go wrong in the purchase of a property, including delays in closing, which means you won't be able to perform if you don't own the property. Also, a verbal confirmation with a tenant is worth nothing and in no way obligates them to perform. Basically, you are just collecting unenforceable expressions of interest. Moreover, how can you collect any money without a written lease in place? I would close on the property and then advertise it for rent as the lawful owner. Much, much cleaner.
Rental Property Investor · Austin, TX · Member since 2014 · 34 posts · 45 votes
6y
A good realtor should be able to help you include this language in the purchase contract and also create a lease agreement with a prospective tenant that is contingent upon the sale going through. We have done this in the past but were explicit in our purchase contract about our right to advertise the property for lease. Likewise, we secured a tenant and signed a lease agreement contingent upon the property closing, but were actually able to add a clause to the sales contract for a lease-back option from the seller to the tenant for a few days when our closing was delayed. IE, our tenant moved in on the original agreed upon sale closing date/ leasing date, and we paid the seller a few hundred dollars for the couple of extra business days it took us to close (effectively giving them the rent for those days). Again, I highly recommend being above board with both parties and have strong written agreements in place.
Rental Property Investor · Huntsville, AL · Member since 2013 · 419 posts · 323 votes
6y
I've had good success with this. Once under contract, my agent gets permission from the seller agent and owners. She lists and starts showing the house up to a month before closing.
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
6y
@Lake I. you say it's move-in ready so the following may not apply, but during a condo purchase a couple years ago I got permission from the owner to fix a minor code violation and clean just before closing. The date of closing my listing went up and I started getting applicants right away.
Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
6y
You wouldn't wanna sign any leases until closing, but no reason you couldn't advertise it for rent and start setting up showings. I wouldn't do this 3 months in advance of closing. Maybe 1 month before close.
Of course, get sellers permission.