Portland, OR · Member since 2019 · 24 posts · 3 votes
Hello all! My fiancé and I will be purchasing our first duplex or triplex and house hacking in one of the units, however there are existing tenants in every unit in the properties we found. Portland, OR.
1) How do we go about (in the friendliest way possible), removing a tenant so that we can stay in one of the units?
2) Most of the properties require an offer before we can view them. I understand that this is pretty standard. Are we able to pull out of the offer for any reason?
3) What are some questions to ask the current owner? Also, red flags to look out for?
4) Do’s, don’ts and tips?
Any advice is greatly appreciated. I’m finding that this forum is awesome with a bunch of helpful people willing to share their experiences to a noob like me. Thanks in advance!
@Mathew Wray is a property manager and investor, turned real estate broker, so he's exactly who I hoped would be chiming in. He knows his stuff! (Thanks for the nice words Mathew!) And some great words of wisdom from @Brad Hammond.
@Wa Chan are you working with an agent out there or is this an off-market purchase? If you don't have an agent I recommend finding one on here under the 'Network' tab or search for a post that has already been written about it, or search the members. Talk to a few before you decide on one.
1) I'm not sure what the current eviction status is in your state but you could have it written into the P&S that one unit is delivered vacant.
2) The properties require an offer prior to viewing or a pre-approval letter from the bank? If you are submitting an offer sight unseen, you can write into the P&S a contingency about, satisfactory review of the property.
Local Portlander (landlord and lender) here. Make sure your real estate broker and the sellers are well-versed in Portland landlord-tenant law. If there isn't already a vacant unit, it may not be possible to get a tenant out involuntarily.
My understanding of the rules (and maybe a Portland property manger can chime in): There are rules in place that allow a seller to give 90 days' notice to a renter in a home that the buyer intends to move into. These rules don't give the same latitude to give notice to the occupant of a unit in a multi-family dwelling. There's a good article on this here.
If a unit isn't already vacant and/or coming up on the end of the first year of a lease (yes, just the first year, after that the landlord must offer lease renewal), the landlord would just have to negotiate with a renter and bribe them to leave.
This could get a bit costly, as the City already requires that landlords pay relocation assistance (more info here).
Most sellers (or their agents anyway) should know these rules and many are timing the sale for when a unit is vacant.
Bit of an aside, but if you're looking to buy a 3 or 4 unit property with an FHA loan (classic house-hacker strategy), you'll want to have a good understanding of the FHA rules. Make sure your lender fills you in! The "self-sufficiency" test FHA requires of 3 and 4 unit properties can be a bear to pass in Portland. (Like almost impossible.)
I have been in this exact situation for my first househack. I would call them a little before(or soon after) you close and let them know that you have plans for the property and they will need to vacate. It depends on if they are month to month or if they have an existing lease.
Be friendly and understanding of their situation but assertive and clear about your intentions. In my opinion, you should steer clear from buying a property with existing tenants... its not always easy to remove them and can be emotionally and mentally taxing but if you have to buy with tenants your first property and its a good deal then it may be worth it.
Definitely re-read @Julee Felsman’s comment again. Now go back and read it again (side note: talk to Julee...she’s a lending and problem solving wizard along with a great person who closes transactions for me personally and professionally)
Your ability to remove tenants because you want to move in is going to be severely curtailed. There are ways to protect yourself (smart searches, writing outs into your offer, cash for keys, etc.) and position yourself ahead of others, but the bottom line is you’re not getting rid of a tenant who doesn’t want to go just so you can move in. Doesn’t mean you can’t find and capitalize on opportunities though!
To answer your other questions briefly...
#2: yes, any experienced agent you’re working with will write the “subject to interior“ to include an out for you based on those results.
#3 (and #4) together, I think the most important thing I can recommend is you work on your mindset around these points. No owner is selling a golden goose. You’re buying their problem, that’s okay because there’s your opportunity but make no mistake, the owners wouldn’t sell if their problem wasn’t painful enough. The trick is for you to do enough due-diligence to get a good idea of what the problem you’re buying is and whether you can handle it. (Side note: the #1 problem I see “sold” is poor management, which is solveable with the right PM). Bonus tip: do yourself a huge favor and get a good PM or if you’re going to go it alone (not sure that’s wise in Portland anymore for most people) give yourself plenty of time to learn the pitfalls and Oregon/Portland specific rules.
Hi @Wa Chan, Congrats on making the leap into purchasing a house hack!
1. It is going to be difficult to remove the tenants so you can move in. I heard a real estate lawyer talking about this yesterday and he said that in Multnomah county, they temporarily did away with the provision that you can evict a tenant if you are planning on occupying a unit. I would look into that if I were you. However, as Mathew said you need to give the tenant 90 days notice but it will only take 30-45 days to close so you make sure you factor that into your timeline.
2. How this works is once there is an accepted offer, you will do a physical walkthrough of each unit. If you don't like the property for ANY reason after the walkthrough you can exit the transaction and get all of your earnest money back. It is a standard procedure and any good real estate agent will make sure you get that protection.
3. Try and figure out why the seller is selling the property, just know that the reason they give you might not be the actual reason. Take everything you hear from the sellers with a grain of salt. Trust but verify.
4. Do as much due diligence as possible. Verify all reoccurring bills, and be absolutely certain that all tenants have been paying rent. This is even more important now than ever. Also, know that your taxes are going to go up after the sale so make sure you account for that in your calculations.
@Julee Felsman I’ll be looking at the properties in the next few days. They all say units occupied but don’t specify whether they are month to month or when leases are set to expire. Will find out. Appreciate you help!
@Mathew Wray is a property manager and investor, turned real estate broker, so he's exactly who I hoped would be chiming in. He knows his stuff! (Thanks for the nice words Mathew!) And some great words of wisdom from @Brad Hammond.