Purchasing SFR with Current Tenants

2 Replies

Hey All, 

My wife and I are thinking of purchasing a home in California, the house is priced relatively well with comps and we like it very much. However, there are currently tenants in place and I am unsure how to proceed with this deal, and any contracts or suggestions to the seller when making this offer. Looking for some advice on how to approach this situation. Here are some numbers/dates. 

Date submitting offer: October 21 

Proposed Closing: November 19

Tenant Lease Expires: January 31st 

Asking Price: 410k 2060 sqft 3bed 3 bath 

Closest Comp in area: 425k 2239 sqft 3bed 2.5bath

Acg Sqft price in area is $191

The comp was sold with real estate agents on both ends. The proposed property is listed FSBO and does not want to pay for Buyer's agent.

How can I approach the tenant issue, and can I use this as leverage on the price? I would like to take possession of the residence NLT Feb 1st.

I would think that the biggest issue the seller will have is trying to get somebody to pay market value without the benefit of using a real estate agent to represent them. Most people are not like you, meaning they don't understand the purchase process and may be turned off by the fact that they cannot be rep'd by a broker. If that isn't an issue you can try to use the tenant issue to leverage the situation. Are you looking to use your VA benefit on the purchase? IF so then you may be able to show that your benefit only extends to O/O properties and as a result you'll be purchasing with something other than the VA loan and that will require a greater investment on your part, etc., etc. Also, you're in San Jose now or did you move? I remember you saying something in another post about moving and needing a referral for an agent. If you're planning on moving into the house you can always write the offer contingent on the property being vacant upon close of escrow. That may work in your favor if you're looking to close on Feb. 1, if the tenant has been in the house for over a year the owner will need to give 60 day notice to vacate.

Are you looking to purchase the property as your primary residence or as a rental?

If I remember correctly, a tenant the right to remain in the property for the duration of the lease agreement with one exception. When the homeowner wants to move into the property as his primary residence, the tenant may be forced out. You must provide a 30-day notice to vacate using the reason you want to inhabit the property as your principal residence.

You should double check on that though.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.