Purchasing Duplex with 1 Bad Tenant?

Question

Hi everyone! Quick question, what’s everyone’s view on purchasing a duplex that has tenants in them already? I know David talks about screening tenants and making sure YOU choose a good fit for your place, as it can make or break your rental property. My numbers work with the rent they are paying, however my realtor has informed me 1 tenant is already extremely difficult (being rude to him, not cooperating with timing of showings, etc). To me this shows they could be a problem tenant.

Would you still purchase the property?Is it worth the headache? Or am I assuming they are already a bad tenant, and they could actually be a fine tenant.. any help would be appreciated thanks!

Allan Smith · Answer

You are correct to assume that this is not a good tenant. I would agree with that. However the Great Deals often have baggage with them and many times it is Tennant related baggage.

here is what I would suggest. As soon as you buy the property scheduling meeting to "train" the tenant. Set expectations how it's going to be with the new sheriff in town. Hope for the best. When the tenant starts being difficult as they most likely will, enforce your lease and proceed to give them notice to leave as needed. Most likely this rental property is not going to be that helpful of an asset to you until this tenant is out but you can at least give them a chance.  Just make sure you are getting a good enough deal for it to be worth the hassle.

Isaac S. · Answer

Also, the realtor could be full of ish and the tenant is the fall guy for the realtors last minute showings and lack of service minded attitude towards the tenant. IF, it's true it could be an indication of bad tenant attitude, or just as much chance it's something you don't even know about in the tenants life or experience, that has nothing to do with you or the realtor.

Eliott Elias · Answer

As long as the tenant is paying rent you shouldn't sweat it. The tenant may feel some type of way because people are constantly invading their personal space and is at the mercy of a new landlord.

Pat L. · Answer

We've had a few over the years where we inherited the odd 'difficult' tenant, but the price was so good the demand for vacant occupancy was not an option. In all cases they were soon terminated as the tenancies were MTM. All complained but left quietly. One had been a resident for 24 years but became an annoying liability. The immediate result was a significant increase in rental income & a 'tranquility' that most landlords would give anything for.

Brett Imperial · Answer

Do you have to honor the lease from the purchaser? If not, start looking for a new tenant. If so, just try to be proactive with them to make sure they are taking care of the place and paying rent on time but keep your options ready to replace them at the end of the lease. Give them a shot though, even though it is YOUR property it probably is an inconvenience for the person who is paying to live there. Just my .2 cents. I give everyone a chance to prove me wrong...or right

Theresa Harris · Answer

Get copies of the lease and see when his is up.  Not being cooperative with showings could be a sign of a bad tenant or someone who is afraid they will have to move and doesn't want to.

Where are you in Canada?  Each province is different. Some are tenant friendly and others less so.  Make sure they have a proper lease.  If you are in BC and don't have an annual lease, it can be a pain to get rid of someone.

David Leggett · Answer

I've dealt with a lot of difficult tenants in properties that my clients were buying and selling and honestly, and it can become an issue if the tenant really wants to make it one.  But not being cooperative in the early stages doesn't always mean they're going to be a bad tenant, the situation might not have been explained to them properly.  This happens a lot, especially with bad listing agents, or sellers who don't give the tenants a heads up the property is for sale or explained the process to them.  A lot of times, they feel like they're going to have to leave, or you're going to drastically raise the rent, but this is not usually the case, especially if they have a long term lease.

I would try and get on the phone with the tenant and explain to them what you're trying to do and they have no reason to worry about anything and you have good intentions and you can gauge how they react.  Normally, they will really appreciate it and will want to work with you in the future, but if you not you can still evict them if they're not paying rent or violating their lease.  But this is how most tenants are when selling a property, its just a matter of communicating with them and making them feel better about the situation and not like they're part of a transaction and numbers on a spreadsheet.

Kyle Madden · Answer

Good call! Thank you very much. I should add that I live in Canada, which is extremely tenant favoured vs landlord. So enforcing the lease is quite the process, but still possible if justifiable.

Dan Kerch · Answer

I would obtain as much information about the tenant as possible. Look at their payment history, speak with the PM if  there is one in place and you could even ask the other tenant about them. Is the lease a MTM or on long term? A lot of the times the tenant is MTM and as soon as you take ownership you can give them a 30 day notice. At the end of the day you have to weigh what is important to you and the risk you want to take. I will take a good deal with MTM bad tenants because I am comfortable taking the risk and understand how to navigate that process. I hope this helps and best of luck!

Conn G. · Answer

Talk with the existing owner/ property manager. Have they had issues in the past? Although you shouldn't create bias based on the buying process, make sure you receive the rent roll, T12, and past tax returns on the property. This should be plenty of information if they pay rent late

Purchasing Duplex with 1 Bad Tenant?

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