Got a deal, but there's a tenant. What now?

2 Replies

First, let me apologize in advance. I tend to get long winded, but I like providing as much detail as possible.

I've found a house that I'll be putting under contract on Friday, the seller and I have verbally agreed to a purchase price. The only hiccup is that there's a non-paying tenant in place. Can somebody provide some guidance on how I should proceed? Specifically, these are my questions:

1. The tenant hasn't paid rent in a while, but the landlord doesn't have the heart to evict the tenant and his family. This is part of the reason why he's selling the house, because he doesn't want the eviction on his conscience. When I market the property for sale I will fully disclose the situation with the tenant, but is it typical for the end buyer to buy the property and then evict the tenant, or will the current owner need to go through the eviction process prior to the sale of the house? It seems like either way would work, but what's more typical? What are your experiences? I also thought about offering the tenant $500 to move out of the house and avoid the eviction on his record.

2. How do I set up a showing of this occupied house? I imagine that the situation with the tenant will worsen when he finds out that the house is being sold. I'm going to disclose to the landlord that I partner with other investors on most of my purchases and that I'll need to walk a few of them through the property. Does the owner tell the tenant that the house is being sold, and that some potential buyers will need to walk through the house? 

Thanks in advance for any help!

In most states the new owner can evict the tenant for non-payment.  

What I would ask this soft-hearted landlord/seller for is a notice of intent to enter if the tenant won't show the house willingly.  You may have to print it up and just ask the seller to sign it for you so it can be posted. 

Cash for keys can work, of course.  I would market it as occupied by non-paying tenant and get the buyers lined up to view the property on the date/time stated in your Notice if Intent to Enter. You should be able to see it, legally.   Whether it will actually work or not may be a different story.

Hope your strike price accounts for a probably sight unseen purchase @Jason McDougall !

Trader terms!

@Steve Vaughan

But Steve is spot on as usual

Just make sure to account for the cost of eviction in your pricing to the end buyer or as long as deal can bear it. 

My first contract had an eviction tenant. Lovely lady, terrible boyfriend, bad financial habits. The eviction went by pretty fast, but the seller was familiar with the process. 

Just find a serious buyer that has landlord experience and can deal with it. Make sure to put in enough protection to keep tire kickers out.