Inherited tenants (by Roy [AL]) Jan 19, 2022 7:48 AM|
Inherited tenants (by NE [PA]) Jan 19, 2022 7:51 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 7:54 AM
Inherited tenants (by Jim in O C [CA]) Jan 19, 2022 8:08 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 8:10 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 8:35 AM
Inherited tenants (by WMH [NC]) Jan 19, 2022 8:37 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 8:41 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 8:47 AM
Inherited tenants (by RB [MI]) Jan 19, 2022 8:49 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 8:52 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 8:56 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 8:57 AM
Inherited tenants (by LisaFL [FL]) Jan 19, 2022 9:00 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 9:00 AM
Inherited tenants (by Ken [NY]) Jan 19, 2022 9:07 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 9:15 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 9:18 AM
Inherited tenants (by Ken [NY]) Jan 19, 2022 9:26 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 9:42 AM
Inherited tenants (by S i d [MO]) Jan 19, 2022 9:47 AM
Inherited tenants (by WMH [NC]) Jan 19, 2022 10:00 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 10:16 AM
Inherited tenants (by NE [PA]) Jan 19, 2022 10:26 AM
Inherited tenants (by S i d [MO]) Jan 19, 2022 10:30 AM
Inherited tenants (by myob [GA]) Jan 19, 2022 10:32 AM
Inherited tenants (by Roy [AL]) Jan 19, 2022 10:57 AM
Inherited tenants (by myob [GA]) Jan 19, 2022 11:02 AM
Inherited tenants (by S i d [MO]) Jan 19, 2022 11:15 AM
Inherited tenants (by Ken [NY]) Jan 19, 2022 11:50 AM
Inherited tenants (by 6x6 [TN]) Jan 19, 2022 12:31 PM
Inherited tenants (by NE [PA]) Jan 19, 2022 12:37 PM
Inherited tenants (by Allym [NJ]) Jan 19, 2022 12:37 PM
Inherited tenants (by Robert J [CA]) Jan 19, 2022 12:41 PM
Inherited tenants (by 6x6 [TN]) Jan 19, 2022 12:57 PM
Inherited tenants (by Robert J [CA]) Jan 19, 2022 1:26 PM
Inherited tenants (by Roy [AL]) Jan 19, 2022 3:14 PM
Inherited tenants (by NE [PA]) Jan 19, 2022 3:19 PM
Inherited tenants (by 6x6 [TN]) Jan 19, 2022 3:42 PM
Inherited tenants (by Roy [AL]) Jan 19, 2022 4:13 PM
Inherited tenants (by Ray-N-Pa [PA]) Jan 19, 2022 7:08 PM
Inherited tenants (by Robin [WI]) Jan 19, 2022 7:23 PM
Inherited tenants (by Sorta Blonde [CA]) Jan 19, 2022 8:37 PM
Inherited tenants (by ned [AL]) Jan 19, 2022 8:46 PM
Inherited tenants (by Robert,OntarioCanada [ON]) Jan 19, 2022 9:45 PM
Inherited tenants (by don [PA]) Jan 21, 2022 11:52 AM
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 7:48 AM
Today I will be looking at another house for sale. What makes this one different is there are tenants currently living in the house and it is obvious the LL/owner wants to sell the house with the tenants.
Some investors think it is an advantage to buy a house with a tenant already in it (instant cash flow). However, the one time (years ago) I bought a house with a tenant it turned out be a disaster.
So, not wanting to pre-judge tenants who I have not even met yet,...what is your opinion on 'inherited tenants' ? How do you screen existing tenants that occupy a house that is for sale? Are you going to believe anything the seller/LL tells you about his tenants?
I have had this discussion with my attorney before and his advice is always the same,...get the tenants out before closing so that I can begin with a 'clean slate'. --71.207.xxx.x
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 7:51 AM
I love inherited tenants. As long as they are paying consistently, I donít screen them. They will try to test you, just let them know who is boss. I have tenants in a unit that I bought seven or eight years ago now and they are snug as a bug in a rug. They paid me more in rent that I paid for the building.
Also, it depends on what your goal is. If your goal is to remodel a building and resell it then kick them out and do that. If your goal is to remodel it and increase it for a higher rent, try raising the rent on these people first and see if you can get close to your target without going through the trouble of all that work. --24.152.xxx.xx
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 7:54 AM
Ps: lawyers arenít always right. --24.152.xxx.xx
Inherited tenants (by Jim in O C [CA]) Posted on: Jan 19, 2022 8:08 AM
Never again would I buy with built in tenants. The effort to recondition the property and tenants is double work. The tenants are used to a different style of management. --99.23.xxx.x
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 8:10 AM
The only time I did not follow my lawyers advice, I would live to regret it. However, I have a brain and some common sense and I run my business the way I see fit.
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 8:35 AM
I have heard (not confirmed yet) the existing tenants are paying $525/month which is about $100 under market. I have a rental house 1 block away and I know this neighborhood. I would be raising the rent assuming I become the new owner.
In my town, one reason M&P LL's want to sell a house with tenants is because they do not know how to do an eviction and/or are just too embarrassed to ask their tenants to move. And if this is the case here, it could easily take 3-6 months to get this house vacated. I am not going to wait that long. So, it could be that I buy the house with the tenant or go look for another house that is vacant. --71.207.xxx.x
Inherited tenants (by WMH [NC]) Posted on: Jan 19, 2022 8:37 AM
I have never had inherited tenants go well. They ALL got mad about rent increases and did NOT want an interested and engaged landlord after having an absent one. The rent increase always caused resentment. --50.82.xxx.xxx
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 8:41 AM
You just have to keep in mind that not all lawyers are investors. So for your lawyer to tell you to kick out inherited tenants is not legal advice. Thatís investment advice that you need to get from other investors. And your own business sense. --174.249.xx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 8:47 AM
I am hoping the rent increase will give them a reason to move out ASAP. --71.207.xxx.x
Inherited tenants (by RB [MI]) Posted on: Jan 19, 2022 8:49 AM
Who pays for Legal advice
and then comes here for validation. --24.183.xxx.xxx
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 8:52 AM
I wonder if big-time investors who buy properties that have 50 to 100 or 200 to 300 units kick all their tenants out before the closing? Something to think about. --174.249.xx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 8:56 AM
You misunderstood me. My lawyer was telling me that I need to get the seller to remove his tenants before the seller and I can go the closing table. It is the sellers responsibility to remove his tenants prior to closing.
And if the seller can't or won't remove his tenants, then what? Stay with the deal or walk away? --71.207.xxx.x
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 8:57 AM
Hereís another thing to think about, if I was selling a building, would I be willing to kick my tenants out given the chance the deal falls through? Maybe on a smalller deal. Unlikely on a large one without a gigantic deposit. --174.249.xx.xxx
Inherited tenants (by LisaFL [FL]) Posted on: Jan 19, 2022 9:00 AM
When you viewed the place how was it kept? How was your interaction with the tenants?
I have bought three places with existing tenants and they contributed to my buying decision. All three were excellent. Two are still with me seven years later.
In two other cases I inherited tenants I would have never picked them and tried to work with them. They were gone within a month or two. I would have ordered them gone before closing but gave them a chance.
In a another case I insisted the existing tenant be gone before closing because there was no way I would ever want to deal with them.
So I go on a case by case basis. But itís pretty easy to figure out which ones are keepers and which ones wonít be. --24.96.xx.xxx
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 9:00 AM
Well first, if itís in the contract that the tenants are out, then make the seller perform. If you want them out and they arenít out, drop your price. If youíre fearful of an unknown tenant, then let that variable squash the deal and walk. If itís not addressed in the contract, I would ignore what the lawyer says about the management aspect unless he/she is a well seasoned investor. --174.249.xx.xxx
Inherited tenants (by Ken [NY]) Posted on: Jan 19, 2022 9:07 AM
I am going to look at a 2 family saturday with a non paying tenant for a year and a half,owner says she didnt pay because the governor said she didnt have to.I will price the house accordingly,actually it is already priced low enough i can turn it over without doing anything other than straightening out the tenant.I will have theowner sign over the rights to he back rent to me and use that to squeeze the tenant.The best deal to be had is when you can fix the problem the current owner has,you can get this place cheap,then fix the problem, fixing the tenant is no different than replacing a broken water heater,just need different skills --72.231.xxx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 9:15 AM
So far, I have only seen photos of the house on Zillow. Today at 11:00a.m. I will meet the listing agent at the house and may even get to meet the tenants.
One thing listing agents try to prevent is a Buyer and Seller meeting face to face. If I make an offer that is accepted, I will then demand that I meet the Seller ASAP whether the listing agent likes it or not.
Now, if you want to see this house on Zillow or the MLS, Google this address: 910 Lay Street, Gadsden, AL 35903. The list price is $39,900. --71.207.xxx.x
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 9:18 AM
That house is spotless and they have a nice newer jeep. You are nuts you kick those tenants out. --174.249.xx.xxx
Inherited tenants (by Ken [NY]) Posted on: Jan 19, 2022 9:26 AM
Roy,that is a nice house,very clean. i bet the tenants are hoping someone decent will buy it and let them stay. If you want to talk to the owner put it in the contract,once you make a deal you cant go back and make demands after.Why do you want to meet the seller? they are probably burned out and the easier you make the closing process the more likely you are to buy it. --72.231.xxx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 9:42 AM
Just got off the phone with the listing agent. Yesterday 4 potential buyers looked at the house and each made a written offer and two of those offers was at the List Price. In a 'normal market', this just does NOT happen. However, this market is not normal, it is insane!
I am still going to look at the house but I doubt I will make an offer. I was going to try to get the house at $30K but I doubt that will ever happen. I will not pay list price for anything. --71.207.xxx.x
Inherited tenants (by S i d [MO]) Posted on: Jan 19, 2022 9:47 AM
I've had both good and bad experiences with inherited tenants. Generally, though, I prefer to start with an empty unit. As you noted, the rent is below market, and I like to get market rent immediately which I can usually do within a week of closing if I have it unoccupied. 1 lost week's rent ($150-$200) isn't worth months of below market rents.
If you go forward with this purchase and decide to keep them, then be sure they fill out an estoppel letter listing all terms of the rental agreement and/or sign a copy of your lease to be included with the closing. A copy of a current lease is useful, but you also need something in hand that says "this is the current, correct lease and there won't be any other agreements made before closing." You don't want the land lord signing something else with the tenants or the tenant claiming he promised them something right before you close.
Inherited tenants (by WMH [NC]) Posted on: Jan 19, 2022 10:00 AM
Roy, the "At or ABOVE" list price is pretty common these days. People are desperate. New housing isn't going up fast enough and is costing MORE than existing housing due to materials increase. Speculators like Zillow itself were buying up available stock at full price for the past couple of years (now they see the error of their ways and are dumping their properties!)
Our last two places, we bought at asking price. One was a private sale and they were asking less than if it ended up on MLS, and the other was already on MLS but was UNDER-priced for what it was (we could see three units while the listing agent only saw one.) --50.82.xxx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 10:16 AM
Until now, I had always assumed the "At or Above" Asking Price price was something that only happened in Class A or B hoods. This house is located in a Class C & D hood. (It is Class C during the daytime and can become Class D at night). It seems like I learn something new every day in this business.
I have other houses to look at, so no big loss here. I will find another one.
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 10:26 AM
Iíd offer over asking on that here. --174.249.xx.xxx
Inherited tenants (by S i d [MO]) Posted on: Jan 19, 2022 10:30 AM
Roy, buddy.... I know this is going to be hard for a guy used to buying dumps for $5000, but keep in mind that if you're going to grow you have to buy inventory.
For clarity, I regard the terms "list price, asking price, retail price" as synonyms.
One of my purchases last year was a $450,000 commercial property. I paid MLS list price because it was WORTH IT. I'm clearing $3500 per month cash after all expenses on it because they listed the price too low!
Now let's look at that house for $39,900 that rents for $525. You said it should rent for $100 more ($625). If we go with the old "percent rules", that's 1.5%, which is GOLD for today's market and will put money in your pocket every month. And if it's in as good a condition as expected, then you're not dumping tons of sweat equity and high priced materials into it.
Don't let the desire to hit home runs blind you to singles and doubles. More teams win games with base hits than grand slams.
Inherited tenants (by myob [GA]) Posted on: Jan 19, 2022 10:32 AM
from 1986 to 2001 my investing days-- We never purchased a house with people in them. Fresh property - fresh start all the way. --99.103.xxx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 10:57 AM
One reason I like reading your replies to my posts is because you force me to look at things from a different perspective. Yes, I know you are correct in what you saying but changing old habits is not easy for me. Since 2008, I have had a tried and true 'system' that I have been using in hitting RE home runs at every opportunity. And it frustrates me that my 'system' does not work in this 'new market'. And the reason it does not work anymore is because I have competition now. Back in my heyday, I was always the only one making an offer! And it was like taking candy from a baby. Are those days gone forever and never coming back? --71.207.xxx.x
Inherited tenants (by myob [GA]) Posted on: Jan 19, 2022 11:02 AM
I for one Roy hope after all these years of bailing hay -- your bails of hay are in the barn and dry! --99.103.xxx.xxx
Inherited tenants (by S i d [MO]) Posted on: Jan 19, 2022 11:15 AM
Roy, my crystal ball is broken, but history tells us all markets move in cycles. This market will eventually cool off. The problem is knowing when and how much.
Have you ever heard the old saying, "The best time to plant a tree was 20 years ago, but right now is still a good time?" IF not, I'm sure you get the drift. Wouldn't we all have LOVED to purchase houses in 2002, knowing what we know now in 2022? I bet you would have been happy as a lark to have purchased 100 homes at full 2002 list price, because today they would be paid off cash cows worth at least 2-3 times what you paid for them. Granted, a lot of that is inflation so we have to adjust for the loss of purchasing power, but still....your rents would have returned every penny you put into them many times over by now.
That's the beauty of long term investing in real estate: even "market price" homes can make you rich if they are in a growing or stable community, just not as quickly as home runs and they don't make as good of a story at a cocktail party. But you and I are Coors men, so not like we'd go to one of those anyway.
Even with my broken crystal ball, I think prices won't go down much. Maybe if interest rates get hiked up they will, but the problem as WMH notes is more from lack of supply. I forget where I read it, but an industry trade group (National Association of Homebuilders?) estimated that to meet demand, they'd have to build 7 million homes per year for 10 years, and those will all be more expensive due to price of material and labor. The rising tide will lift our boats as well, since some folks will still need cheaper homes to rent or buy.
So the time to plant a tree/buy a house is ... NOW!
Inherited tenants (by Ken [NY]) Posted on: Jan 19, 2022 11:50 AM
Roy,I have been through this market 3 times,it will go back to normal.Run your handyman ad again,it may produce.I am starting to get calls again even in my state with my advertising --72.231.xxx.xxx
Inherited tenants (by 6x6 [TN]) Posted on: Jan 19, 2022 12:31 PM
The picture is dated 9-9-2020 --73.120.xx.xxx
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 12:37 PM
Nice catch 6 x 6. So, if Roy goes to view this house and itís in the same condition with the same tenants, even better. --174.249.xx.xxx
Inherited tenants (by Allym [NJ]) Posted on: Jan 19, 2022 12:37 PM
There is something called an estoppel letter that lets the tenants tell you before closing if the LL owes them anything that the landlord promised to fix and did not, where there security deposit is, how much it is and anything that the landlord, now you, is required to do for them. A very complicated version of that was put into the sale papers for my two four units. My attorney would not tell me what it was or never read it and let his overworked legal assistant handle it. I signed it without reading it as I pay the lawyer to do that and when I saw it I was very upset as it was gibberish that could have had me paying for tenant damages going forward. I got it removed and reworded or I was not closing. Your attorney can probably write one that does the same thing. Anything they have caused over the years in damages going forward would be the responsibility of the seller for example rotted floor under toilet due to loss of wax collar. I would go ahead if it's a good price if seller can prove they are paying or if they are not paying because seller isn't fixing anything. --108.24.xx.xx
Inherited tenants (by Robert J [CA]) Posted on: Jan 19, 2022 12:41 PM
I have purchased several properties because of the owners bad management and their terrible choice of tenants. Apartment being rented only because the applicants had all of the move-in funds and No Credit Report or Background checking was done!
So I got the LISTING AGENT to get from each tenant a signed Estoppel listing:
How many people are living in the unit and their names:______
What is your monthly rent:___________________________________
What is your "Deposit":______________________________________
What appliances do you own:__________________________________
Do you have any pets, type:__________________________________
Are you on an annual lease or a month-to-month tenancy:______
And So On....
One tenant wrote: I am a single mom living in the apartment myself..
I have no pets. I won all of the appliances myself.
I am not required to have any deposit.
On month after buying the property, this tenant allowed her two daughters with their children to live with her. There were two dogs. An appliance broke and the tenant then said, I have to fix or replace the refrigerator because it was mine and not hers.
So I was able to raise the tenants rent by 10% per month per person with a 60 day notice, for the extra daughters and grand children. I didn't have to fix the refrigerator because in the estoppel the tenant listed the appliances as being her property. And I asked the tenant to get rid of the unapproved dogs.
All of this was possible because tenants like most people will lie given an opportunity so the estoppels were worth their weight in gold. --47.155.xx.xxx
Inherited tenants (by 6x6 [TN]) Posted on: Jan 19, 2022 12:57 PM
What does it cost to have an estoppel done? --73.120.xx.xxx
Inherited tenants (by Robert J [CA]) Posted on: Jan 19, 2022 1:26 PM
No cost. You write it up with your questions and have the listing agent get the tenants to fill them out.
My last property I had each tenant fill out a Special Estoppel on Parking. Do they have 1,2 or 3 sparking spaces... --47.155.xx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 3:14 PM
I have seen the inside of the house and had a conversation with the agent. I asked the agent if any of 4 offers yesterday were above the asking price,..she said Yes. However, all of those 4 offers were saddled with contingencies galore mainly contingent on obtaining financing. I then asked the agent, 'How does anyone get a mortgage for anything less than $50K? She said, "it is not easy but it can be done". So, I made an offer at $35K with no contingencies. So, that is that. She said the owner would review all offers toward the end of the week and make a decision then. I am not holding my breath here. --71.207.xxx.x
Inherited tenants (by NE [PA]) Posted on: Jan 19, 2022 3:19 PM
You gave that deal away. --24.152.xxx.xx
Inherited tenants (by 6x6 [TN]) Posted on: Jan 19, 2022 3:42 PM
Thank you Robert J.
Keep us posted Roy. Did the inside look like the pictures. --73.120.xx.xxx
Inherited tenants (by Roy [AL]) Posted on: Jan 19, 2022 4:13 PM
Yes it did. Tenants were not at home at the time.
NE: Who I did give this deal away to? I can't give something away unless I had it to begin with.
Knowing what I know now, I think I have the strongest offer on the table right now. --71.207.xxx.x
Inherited tenants (by Ray-N-Pa [PA]) Posted on: Jan 19, 2022 7:08 PM
Just my two cents worth......
If i was selling the first person I would want to sell to would be the existing tenants. But either they don't like the place (red flag), don't have the capability (red flag) or have elected not to stay that much longer (giving you a future rehab job since you don't have much of records on how it looked like when they moved in). All these tend to result in the new owner having a headache. These headaches would pale in size though if after you bought the place these tenants stopped paying and suddenly claimed that some absurd way that they have equality interest in the property. It could be via defaulted land contract, option to purchase or even a verbal agreement saying the old owner was going to sell it them for $1.
Well congrats, you are no longer doing an eviction - nope you hit the major leagues there with an ejectment. One that can last well over a year to prove that they full of crapoloa ..... That will not matter as it will cost you $2,500 or more in legal fees and a years worth of rent which you will never ever see again because you were scammed.
So yes, you can save money on screening and the time filling a vacancy. But there is a risk for such a move. How long do you think it will take to get the place filled up after it is emptied? If you are worried what the place will look like during the move out, just all the more reason to have it done before you buy.
Now if you are planning on a total rehab anyway - it just might be a mute point --24.101.xxx.xxx
Inherited tenants (by Robin [WI]) Posted on: Jan 19, 2022 7:23 PM
I bought my first tenant-occupied property about four months ago, and didn't ask for the tenant to vacate first. I WANTED him to stay. Why?
--When we came to see the property, he didn't know we were coming but let us in anyway. That spoke volumes to me about his character (trusting, cooperative, helpful).
--Subsequent interactions confirmed the first impression
--He was paying generous rent in a marginal neighborhood
--He was current on his rent and expressed genuine surprise that we might think he wouldn't pay on time.
--The property needed repairs (windows, lots of plumbing rework, garage tear-down, gutters, tree removal, the whole thing needed to be repainted...) I liked the idea of collecting rent while the work was being done.
He's been a dream tenant, super cooperative with all the work we were doing. The repairs are done now (well, still waiting on windows). The rent goes up in May, and with his smoking and four dogs, I think he'll stay forever. If you can meet the tenant first and get a sense for their character, that will help with the decision-making. --104.230.xxx.xx
Inherited tenants (by Sorta Blonde [CA]) Posted on: Jan 19, 2022 8:37 PM
I bought my current and only property 23 years ago. It's a 3 on 1 and I live in the primary house. I sent letters to both the other residences explaining I was taking over (I'd already lived here for 20 years anyway) and included a NEW Rental Agreement with new rules and a nice rent increase. One of the residence's tenants move out within 2 weeks, the other house residents stayed for another 20 years! All went smoothly. The new agreement certainly hit hard on the ones who moved out. Guess they didn't like the new rules from the new 'ruler'. I'd do it again based on my experience with this. Wish I had the money to buy more properties. --174.65.xxx.xx
Inherited tenants (by ned [AL]) Posted on: Jan 19, 2022 8:46 PM
I've had better than average luck with inherited tenants. Have some that I've had decade+.
There's exceptions, but overall- inherited tenants equal: instant cash flow.
Bump rent moderately as needed. --70.92.xx.xx
Inherited tenants (by Robert,OntarioCanada [ON]) Posted on: Jan 19, 2022 9:45 PM
If possible raise rent at least 3 per cent then 3 or more per cent in the following years as there significant inflation in the Us. Need to access inside to see what is going to required along the outside. Arrears or late rent is non starter as some rental housing providers let things slide. --68.69.xxx.xxx
Inherited tenants (by don [PA]) Posted on: Jan 21, 2022 11:52 AM
You want the seller to prove to you that they are current on their rent, such as by showing his tax return showing payments. If he cannot satisfy you that they are good payers, ask for money to be held in escrow to guarantee payment for the coming year. Each month as they pay, a month of the escrow is released. --73.141.xxx.xxx