I'm a real estate investor in Northern Colorado. This is very tight market when 2-4 unit multi family, townhomes, condos do not stay on the market for more than a few days. A lot of these properties already have an existing tenant. Although the due dilgence period allows review of the existing lease and application, it's only as out clause and generally you have to either pass or accept the existing tenant and lease until the renewal.
My question to my fellow network of RE investors, how do handle an existing lease? Especially if it doesn't come up for renewal 6 or more months after purchase. Appreciate your comments and reposes.
@Earl McFarland you live with it. You can write your contract so that the property must be vacant at closing but that usually doesn't fly too well. Once you own the property you can negotiate with the existing tenants to leave early but the lease governs until it expires. Usually this is not a big deal in my mind unless there is a long lease (multiple years) in place.
Make sure you get an estoppel certificate from the existing tenants so that you know there are no side agreements and have a document that verifies deposit amounts etc.
Really and truly the lease is only critical if there is a problem and in most cases there is no problem. It's a risk that you must consider.
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