House hack duplex with older tenant

[Eric Anderson]

Good morning, I am buying my first property, a 4/2 duplex on both sides.  I'm going to house hack the property.  The current owners live in one side and the other side has a tenant that has been in the property for 33 years!  He is 81 years old and does not want to move, and his side has not been updated since he has moved in.  I am buying the property at a discount because his side has not been updated, however, the other side was updated a few years ago.  My initial plan was to have him move out, remodel and move into that side while renting out the updated side for market value covering almost 60% of my mortgage.  In the lease I wrote up for the tenant I put a rent amount I thought he could not afford but he said he has changed some things around to be able to make it work.  The trouble I'm having is if he does stay that means I will have to pay the 60% and he will be paying 40%.  He also does not want me to update his side because he realizes the rent will go up.  My plan going into buying this duplex was to get forced equity from updating his side and performing updates to the exterior of the building and landscaping, then when the time is right using equity to buy another home.  I know business is business but I also have a heart and have a hard time telling an 81 year old good luck and he needs to move out.  I do have the lease written up as a month to month in case he finds out he cannot afford the new rent amount.  The lease has not been signed by either party yet and I close on the 28th of this month.   What are your thoughts on the situation?  Thank you so much for your input!

[Olivia Radziszewski]

Hi @Eric Anderson- That is indeed very tough! I definitely understand you saying that you have a heart and you do not want to have to have him forced out of his home! Unfortunately, in this business you will often have situations like that as you are dealing with people. Is it possible for you to do a 6 month lease with the clear intention that you will not be renewing? This way he has ample time to find a new place. I would though, have him move out so you can continue with your business plan. Ultimately this is a business and we have to treat it as such, the fact that you even feel bad tells me that when you reach financial freedom you will help people with your money. We cannot however, get there if at every tough situation we compromise our business plan. Difficult, yes, however, you can help a lot more people once you get to where you need to be and handle situations without being completely heartless, such as giving him 6 months. I would, in the next situation that comes up, either put the rent at a price that you would need it to be at or just tell him that you do not want to renew at all. Good luck!