Close with tenets in house or not to close with tenets in house+

[Spenser Finnestad]

Hello All,

I'm currently buying a home and at the home stretch. This is my first property and would love to hear some feedback on this.

The facts/situation:

- Original closing date early June.

- Tenants were given 30 day notice on May 20th.

- Tenants want to stay till the 30th, landlord/seller trying to convince them to move out the 20th. My current apartment lease is up on the 24th. 

- The proposed closing dates will be 22nd or July 2nd.

- I go to military training on the 7th.

I have a good lock on my interest rate and afraid of doing the mortgage application over again due to a slight decrease in my current job pay but will be going up again in a few months and I'll also be house hacking once I own and solely live in the house. I would use the time with current tenants to get contractors in and give me estimates on future projects I have planned for the place, then execute them once tenants move out.

If there is a good contract on the tenants moving out either June 20th or July 2nd with the prior landlord, would you go forward with the June 5th closing date or move it to a different date after the current tenants leave?

[Carl Millsap]

Spenser, 

Keep It Simple...let the current owner provide you a tenant free property. 

Do they have a valid lease? When does it expire?

Once you close the problem with those tenants whom you don't have a relationship / history with will be yours. 

Sounds like you plan to renovate when they move. They have 0 incentive to let contractors in once you take ownership, and the current owner has 0 incentive to assist you with them once you close. 

Don't take on someone else's problem....good luck. 

[Caleb Griffin]

I agree with @Carl Millsap it is very risky to take on tenants in a situation like yours. We personally don't close on properties unless they are vacant at close.

Ask yourself, "What is the worst that could happen in this situation? And am I prepared to handle that if it does?"

Good luck!

[Spenser Finnestad]

Quote from @Carl Millsap:

Spenser, 

Keep It Simple...let the current owner provide you a tenant free property. 

Do they have a valid lease? When does it expire?

Once you close the problem with those tenants whom you don't have a relationship / history with will be yours. 

Sounds like you plan to renovate when they move. They have 0 incentive to let contractors in once you take ownership, and the current owner has 0 incentive to assist you with them once you close. 

Don't take on someone else's problem....good luck. 

Thank you Carl, for your input on this and this only reassures me of my original plan on this matter. I was fine closing on a day after the tenants leave as you said "Don't take on someone else's problem" I fully agree with this and will not close with tenants in this house. 

[Spenser Finnestad]

Quote from @Caleb Griffin:

I agree with @Carl Millsap it is very risky to take on tenants in a situation like yours. We personally don't close on properties unless they are vacant at close.

Ask yourself, "What is the worst that could happen in this situation? And am I prepared to handle that if it does?"

Good luck!

 Caleb,

I appreciate the feedback. I know the smart move here is to close with the property vacant and will be going forward with that plan and redoing the mortgage process again with my lender for that new closing date.

[Lynn McGeein]

@Spenser Finnestad read your contract, as if seller promised you it’s vacant, free and clear by closing date, maybe they can pay a fee to the lender to extend your rate lock until they can honor their side of the contract, or maybe they pay the tenants money to get out now. There are usually terms explaining what happens if seller can’t perform. They shouldn’t have sold it to an owner occupant if they couldn’t get tenant out. Your closing attorney should be able to explain your options if your real estate agent can’t offer alternatives.

[Spenser Finnestad]

Quote from @Lynn McGeein:

@Spenser Finnestad read your contract, as if seller promised you it’s vacant, free and clear by closing date, maybe they can pay a fee to the lender to extend your rate lock until they can honor their side of the contract, or maybe they pay the tenants money to get out now. There are usually terms explaining what happens if seller can’t perform. They shouldn’t have sold it to an owner occupant if they couldn’t get tenant out. Your closing attorney should be able to explain your options if your real estate agent can’t offer alternatives.

 Hello Lynn, 

The seller ended up giving more seller credit to pay for the rate lock extension. I appreciate the out reach and valued your input on my situation. Thank you!