I have two questions regarding a deal that I am looking into.
1). The owner who is looking to sell is using the property as a rental and he is sick of being a land lord. If the tenants are still in their lease would I have to wait until the lease was over before I could evict the tenants or ask them to move out? Or are they protected by the current lease even if ownership changes?
2). I noticed when looking up the property tax info that the evaluation has gone done over the last 3 years. Is this due to market changes or could it be from the condition of the house getting worse due to the tenants not taking care of it or both?
On another note the seller says he would be willing to do a contract for deed on the property. Would it make sense to take a contract for deed and just wait until the tenants lease was up and then either rehab it or pass it on to another investor to rehab it then?
I am a newbie in the business but I can give you my opinion:
1- the tenants are protected by their lease and as a new owner, you are not obligated to renew their lease (most lease agreements have provisions that state that).
2- Who really cares about the tax value? You should be concerned about the market value in the area. I wish my tax value can go down so i can pay less money to Uncle Sam. Have an agent pull up some Comps and give you the estimated value based on the current condition of your deal.
The contract for deed sounds sweet but do your homework and make sure there is no liens.
I am hoping some members here will give you more detailed advice.
Good luck with your deal and keep us posted
Thanks @Angele Socho
That's kind of what I was thinking about the tenant situation but I have never dealt with this before so I though I should ask and see what I can find out.
Also I got comps from the MLS and I was able to put a value on the property for about double the amount the county assessed it for. Which is also the amount the owner is asking for it. I am just not sure whether that meant property values in the area were declining or not.
I have no idea if this a good deal or not or if a land contract is a good idea from a buyer's perspective in MN.
If there is a lease in place, you must honor it. However, if the tenant is violating the lease, you are able to evict by following the correct procedures. It sounds like the current tenant is a problem and the landlord wants out. If this is the case, I would have the current landlord get rid of that tenant. If they don't want to do the dirty work, I would ask for a good discount on the property since you have no idea what condition the place will be in at that time.
Make sure it's a 12 month lease and not a MTM rental agreement. If the tenant is MTM, you can give them a month's notice (depending on your state law) and get rid of them for no reason.
thanks for the input @Darren Budahn .
Another question: would I be able to sign a purchase agreement on the property to buy the home with a contract for deed? That way I could have the property locked up but still have time to do a thorough inspection before I sign the actual contract for deed. Or would I just be better off waiting to get the inspection and then just doing only the CFD?
That is a good question and I do not know the answer. I would think you would be able to put an inspection contingency in the contract for deed, but I do not know. I would reach out to someone in your area or one of the BP experts. Try @Brian Gibbons or @Bill Gulley. Not sure why the tagging function worked for your name but not for them.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!