buying property w tennants already in place

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buying property w tennants already in place

Fred Conway
tampa, FL · Member since 2014 · 86 posts · 23 votes

want to buy a property that currently has renters in place until november 1st. All indications are that they are great tennants and no problems but they are paying below market rent. In florida, you cannot remove them until their lease is up. My question is, how do i go about buying the property

Main questions around security deposit, how do i get it? Interactions w current tenant, do i reach out to them? Any advice is appreciated.

Thanks

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Matt Cramer
Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes
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I believe their are a few ways to handle that. The seller should somehow give you a credit for the security deposit though. You should ask for all the current documents he has on the tenant before writing the offer or make sure the offer is contingent on you reviewing and being satisfied with those documents. I believe on a duplex I just sold the tenants security deposit was transferred to the new buyer and they had to setup an account for it. 

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  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
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    I believe you will have to honor their current lease as part of the purchase. Once November 1st comes you will issue your lease with your terms.
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  • Matt Cramer
    Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes
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    I believe their are a few ways to handle that. The seller should somehow give you a credit for the security deposit though. You should ask for all the current documents he has on the tenant before writing the offer or make sure the offer is contingent on you reviewing and being satisfied with those documents. I believe on a duplex I just sold the tenants security deposit was transferred to the new buyer and they had to setup an account for it. 

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  • Jeff G.
    Investor · West Bend, WI · Member since 2014 · 214 posts · 149 votes
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    I bought a house with tenants. You by law must honor the leases and the security deposits must be transferred to you. The seller just wrote me a personal check for the deposits at closing.
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  • Jeff Rabinowitz
    Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
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    Originally posted by @Fred Conway:

    want to buy a property that currently has renters in place until november 1st. All indications are that they are great tennants and no problems but they are paying below market rent. In florida, you cannot remove them until their lease is up. My question is, how do i go about buying the property

    Main questions around security deposit, how do i get it? Interactions w current tenant, do i reach out to them? Any advice is appreciated.

    Thanks

     If you haven't had contact with the tenants what indicates that they are great tenants? The seller's endorsement? If they are such great tenants, why is he selling? I would do whatever you can to verify that the tenants are great. Get a copy of the rent roll--is it believable? Get copies of their rental applications and make sure you have current information in case you need to evict in the future or need to collect monies owed. Speaking to them isn't a bad idea--verify the information the seller gave you.

    The security deposits should be transferred at closing along with any rent due. If you close on the second of the month the seller should transfer the rent, in full, for that month, whether it has been paid by the tenant or not. Collecting rent is the seller's responsibility until the property transfers. You may transfer any rent which the tenant pays late to the seller when it actually comes in.

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  • Fred Conway
    OP
    tampa, FL · Member since 2014 · 86 posts · 23 votes
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    Thanks jeff. I am taking the sellers word for it and need to get access to the rent roll. I was told hes bought low and wants to cash out and move on to another property. I havent spoken to the owner, just the property manager.

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  • Radhika M.
    Investor · San Jose, CA · Member since 2014 · 167 posts · 146 votes
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    @Fred Conway

    In addition to the rent roll you should also ask for tenant estopels. The security deposit should be handed over to you at closing. Good luck.

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