Should i evict a tenant to live in myself, or continue renting

Should i evict a tenant to live in myself, or continue renting

Houston, TX · Member since 2019 · 26 posts · 2 votes

So i came across this duplex and it costs roughly 270k to purchase. both unit occupied with tenants already. Tenant A current rent 1300, tenant B current 1250. Both in the house 5+ years, and never late payment according to seller. Tax roughly 4500 for 2018. and 1700 for insurance, tenants pays all utilities/mantenance. This seems like a house already cash flowing+ ( calculation shows roughly 400 a month if i pay listing price assuming no rehab required, everything sold/run as is)

The thing is, im looking for a place to live in myself, and so if im looking to take over this property, i'd have to evict one of the tenant which from what i've read is a nightmare, this is my first time buying so i really don't want to mess with what's already working smoothly. So im wondering if i should go ahead and get the property , then continue to rent and use the cashflow to offset part of my rent until i find another residence. Or simply move on and look for another multi to househack in.

edit: I know if i continue to pay rent it is basically a negative ROI at first, but im thinking it would be a good way to dip my toes into REI because it is already a well run machine and i can start learning how to landlord as everything's already set up in place. (no rehab required)

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  • Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
    7y

    @Brian Cheng. On the surface sounds good. You have $2550 Rent from current tenants. Your PITI (FHA Loan - 3.50% DP) should be about $1846. So you'll have $704 Rental Income, before MX, CapEx, Vacancy, etc.

    You'll need to know more about the current leases. When do the terminate - recognizing you can't just evict someone, so you can occupy as long as they have a valid lease. 

  • Houston, TX · Member since 2019 · 26 posts · 2 votes
    7y
    Originally posted by @Jim Cummings:

    @Brian Cheng. On the surface sounds good. You have $2550 Rent from current tenants. Your PITI (FHA Loan - 3.50% DP) should be about $1846. So you'll have $704 Rental Income, before MX, CapEx, Vacancy, etc.

    You'll need to know more about the current leases. When do the terminate - recognizing you can't just evict someone, so you can occupy as long as they have a valid lease. 




    thank you for the reply. So i would be doing a 20% conventional loan. I am simply wondering if i should just buy this property for the cash flow, then continue to rent until i find another property for myself. or forgo this property altogether given it's my first time. One tenant's lease is month to month but has been there 6 years, other is 10+ yr old tenant that just renewed his/her lease.

  • Houston, TX · Member since 2019 · 26 posts · 2 votes
    7y

    Also, since it the tenants already settled in and paying rent. Do i still need to do inspections just as if im buying a new property? or is it simply a transfer of ownership?

  • Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
    7y

    @Brian Cheng. You most likely will have to do 25% DP if buying as an Investor. With 25% DP, PITI is about $1608. Leaving $943 above the Mortgage. The numbers are good enough for me to delve further into the analysis.

    In the end, it still boils down to is this a property you would like to own, will it increase in value, is there a possibility of raising rents over time, etc, etc. 

    There is nothing GUARANTEED in RE Investing. You analyze the situation - but It's still a gut call. 

  • Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
    7y

    @Brian Cheng. Have the Property Inspected by a Licensed Home Inspector. 

    I've been around RE for nearly 30 years & still have every Property Inspected. If I was buying something that looked like a total "Gut Job" I might not have it inspected dependent upon the Price. 

    In your case with little to no experience - Definitely have the property Inspected. At least you'll have a feel for the condition, and probably learn a lot in the process.

    Good Luck!

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