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

5 Replies

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)

@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. 

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.

Promotion
PPR Note Company
Note Investing
Diversify your portfolio and get completely passive cashflow.
All without tenants, repairs, or vacancies - in a real-estate-backed investment fund.
Here's how.

@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. 

@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!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you