Buying a house with a tenant that has lost his job

[Lisa H.]

I have just been notified that the house I am in contract with--that currently has tenants renting out--has been late with their rent for the last 3 months due to a job loss. I just got confirmation he got a job but obviously the only thing I can verify is his rental tenant history.  Which isn't much since he started renting in April 2024.  There are 4 months of on-time payments consistently. Then 3 months of late payments consistently (the last 3 months). With no rent for this current month. I also did some investigating online and see the renter has a tendency not to hold down a job.

I offered asking price (fair market) because it was the sellers bottom line and the fact there were already tenants renting. I'd cash flow immediately without having to pay for a PM to place tenants ( I am out of state).  I am unsure if I should proceed.  The house has some great pros:

• Newer 2000's home with renovations in the last 4 years

• Renovations include: paint, lvp, toilets, vanity, ceiling lights/fans, roof and HVAC

• Tenants look like they are up keeping the house decently. Very clean and mostly organized.

The rent is at fair to maybe even above average. The property hit's the 1%.  Actually 1.45% but when factoring in PM, vacancy and renovation percentages, my cash flow is only $160.  Which I know is low but am looking for long/mid term equity too. Not just cash flow.  

Thoughts?

[Adam Bartomeo]

You can use this as an opportunity to get a lower sales price, that what I do. The risk has gone up so the price should go down. They will argue the fact that they have are only behind by one month and that they have always paid (25% of our tenant base is late). I would bake into the price that you may have to evict them, have vacancy, have months of nonpayment. Ultimately, if the numbers make sense for your than move forward.