Purchase with non-cooperative tenant?

[Jessica Kiely]

I am considering purchasing a duplex with BRRR strategy. One unit is vacant. The other unit is occupied at under market rent (very under at almost half of current market rents) with 3 months left on the lease. According to the current owner, the tenant is not cooperative with allowing showing of the unit that he occupies. The units will require renovations that could take 4-6 months as we would do the work ourselves outside our 9-5 jobs. On one hand it may be a positive to have some income coming in from the remaining lease while we update the first unit. On the other hand, I would not renew the lease at under market rent and this tenant could carry over uncooperative behavior with me as the new owner.

What pitfalls should I be aware of and what actions should I take as we consider the purchase?

[Sam Kahl]

If the tenant is not cooperative, are they current on rent? Can the landlord provide documentation of their payment history? I would NOT advise a client to ever purchase a tenant occupied property with uncooperative tenants unless they are very experienced investors or the property purchase price comes at a discount that reflects this fairly major issue they are conveying to you with the sale.

How long has this place been on the market? If the landlord is desperate, they should be willing to help pay the tenant to cooperate or vacate.

I would also get familiar with the landlord/tenant laws where this is located.

Make sure the landlord has a plan to allow your inspector and appraiser (if any of these apply) access to the occupied unit.

I did a piece on buying tenant occupied properties awhile back and and got some fantastic responses... maybe something here could help in your situation. Link here.

I hope it all works out great for you in the end!