Investor · Wichita, KS · Member since 2013 · 18 posts · 2 votes
I am talking to a seller who inherited a house within the last year. She didn't know if anyone was living in the house. The tenant had stopped paying rent and she didn't follow though on an eviction. I drove past and there was clearly someone living there. She was obviously upset, but I told her I may be able to help her by buying the house.
How can I wholesale a deal like this? Obviously my end buyers would not be able to inspect the inside with someone living there.
The ARV would probably be 58-60K. It's a rental class neighborhood. The exterior of the house looked to be in good repair. How low do I need to go to account for the unknown repairs on the inside?
Would the situation be the same if the tenant didn't need to be evicted?
Wholesaler · Nashville, TN · Member since 2014 · 407 posts · 180 votes
11y
You can always use the cash for keys approach and tell the tent the situation, "Hey I am purchasing this house to sell to another investor and he will be evicting you upon closing. I am very sorry to hear this but hope that we can work together to make this a smooth transaction and instead of evicting you and having that on your rental history I would be glad to give you 500 dollars to help you move the day we close that way you leave with extra money and your renters background in good standing.. However, in the mean time I will have to show my investors the house to get this deal completed."
Wholesaler · Nashville, TN · Member since 2014 · 407 posts · 180 votes
11y
You can always use the cash for keys approach and tell the tent the situation, "Hey I am purchasing this house to sell to another investor and he will be evicting you upon closing. I am very sorry to hear this but hope that we can work together to make this a smooth transaction and instead of evicting you and having that on your rental history I would be glad to give you 500 dollars to help you move the day we close that way you leave with extra money and your renters background in good standing.. However, in the mean time I will have to show my investors the house to get this deal completed."
This has happened to me a few times and has worked out every time.
It's a nerve racking situation because you don't know who is living in the house. Going up and knocking on the door certainly gave me the butterflies because you have no idea what you're getting yourself into.
What's worked for me each time is getting the bad tenant on my side. I'll listen to their sob story about how bad the landlord is and try my best to build a good rapport with them. I want them to think that I am on their side and will take care of them after a sale. I explain that I need to get inside but will work around their very busy schedule. Once I get inside I'll take my pictures and start to market the deal.
When you're ready to show the property weed out any tire kickers, you don't want to rock the boat with a bad tenant by having a bunch of showings. Once you get your solid buyers lined up, ALWAYS prepare them for the fact that they'll need to do an eviction but more importantly that the tenant is going to bad mouth the property like crazy. The tenant has been able to live rent free for months and if a sale happens, they won't be able to take advantage of the current owner any longer. They'll do whatever they can to scare off potential buyers.
As far as negotiating with the seller, I always get a deep discount for inheriting an eviction. If possible, close on it yourself, do the eviction and then sell it, you will make a lot more $$.
That or you could just factor in an inflated repair cost to your purchase price by peeking in the windows to see how the inside looks.. If it looks decent just take off an extra 10 to 20k so your end buyer feels good about moving forward without seeing it.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
7y
An eviction doesn't necessarily need to take place to empty a property. Give notice to vacate and some information to the holdover tenant as to why they don't want to be evicted. See if they'll leave on their own. Depends a lot on the state. Here in Georgia, it doesn't take long to empty a property one way or the other.