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BUYING PROPERTIES WITH TENANTS.

BUYING PROPERTIES WITH TENANTS.

Authored by Thomas Visaggio on June 30, 2019

Don't do it! If possible you always want to buy properties that are fully vacant. A number of issues come into play during and especially after closing which sabotage your plans for the property. Even if you buy at a good price - an inherited tenant can quickly compress margins and take up a substantial amount of your time. We ran into this issue when purchasing a 2 family with an illegal attic apartment in Newark, NJ. The property was fully occupied - meaning the 1st unit, 2nd unit, and illegal 3rd unit all had tenants. The tenants were not interested in moving hence were uncooperative and creating the following difficulties:

  • No access provided (appraiser had to be rescheduled on 3 different occasions, unable to get contractors inside to view work, unable to get city official inside to complete TCO inspection)
  • Fictitious move out dates (each time we got to the represented closing date, another 2-4 weeks would be tacked on by the tenant for any reason at all)
  • Unrealistic cash for keys expectations (tenants try to leverage their position by asking for cash in excess of $5,000 in order to move out)
  • Unresponsiveness (one tenant agreed to go on a lease at market rent - but when closing came up they were not answering the phone and not willing to sign off on the lease)

All of these issues and more are reasons why you should never get involved in a property that will be delivered with tenants (unless they are willing to go on leases before closing and you are are able to complete your own vetting process before doing so). It is better to put in the contract when you receive an accepted offer that the property will be delivered with absolutely no tenancies. Contact us to find out how we can help you.

Buying, Selling, or Investing, PrawdzikProperties is the right company for you.