Really need advice! Trouble moving disabled vet out, inherit him?

Question

I'm trying to buy a duplex. Part of the agreement was to move the tenant on one side out so I could move in. The seller is having trouble finding him a place- he's a disabled veteran. They were on a month to month lease- I was under the impression he could give him the standard month's notice and he'd be out, but apparently there are more protections? (MA).

They want an extension on closing, but if they're having this much trouble now, I'm just waiting for them to come back and ask for more time later on. There's no telling when they could get him out.

So what about plan B? I could keep him as a tenant and find myself another place. Records show he's been a fine tenant who minds his own business and pays.

So couple questions:

Does this guy, as a disabled veteran, have special rights that make it harder to evict him, or do the standard month's notice?

How crazy am I for thinking inheriting this guy is a good enough solution to this? Its a big risk that he'll want to pay my desired rent and he'll be all fine after being told he was supposed to move out.

If its not the worst idea, how could I do this hand off effectively?

Besides walking away (I'm $1k in so far), what might I look into doing?

This is my first deal, WTF!

Ann Bellamy · Answer

Brendan, at least you are asking before you buy the property, instead of after, when it's too late! I know everyone hates it when I say, "Hire an attorney", but MA is the most tenant friendly state in the country. So here are a couple of suggestions to start:1. Read all of the landlord tenant laws on Mass.gov2. Imagine the judge's reaction when you go in front of him saying you want to evict a disabled veteran who is paying on time and bothering no one. That won't go well, and he probably does have additional rights. Even if he doesn't, the judge will create some and grant them to him. This is Massachusetts after all, where judges routinely ignore the statutes.3. Consider moving into the other unit, or consider moving him into the other unit.4. Try to work out a plan with the seller where you can sit down and discuss this with the veteran before you buy, and ask him. If you can work out an equitable arrangement, having a tenant who doesn't bother anyone and pays on time is not a bad thing. Consider gradual rent increases instead of a big bump.5. I know I'm coming at this from the compassionate angle instead of the business angle, but shouldn't we, as real estate investors, try to accomodate those who served and paid a high price? Normally I advise keeping your charitable activites separate from your business activities, so I'm not suggesting giving him a rent break, just being flexible as to the implementation.6. Talk to a real estate attorney who specializes in landlord/tenant law.

Brendan L. · Answer

Thanks for the thoughts everyone. I've gone ahead and given the extension. I think the play is to really try to get him out, rather than inheriting him, so I'll just plan to extend the date for as long as they need, and plan my living situation around that. One of the issues was, I was ending my lease at my current apartment, so I may have to find temporary housing. But why not double down? I'm looking into buying a second duplex while I wait for this one to close, would be a place for me to live and place to grow my empire at the same time!

Mike Cumbie · Answer

@Brendan Longe,Let me preface by saying I am a veteran, I am a member of 2 local veteran organizations and I spend a decent amount of time working with veteran charities. All that said, Give the extension and let them work it out. At this point you are trying to insert yourself into this problem. A third person is just adding a new level of complexity to the situation. I do not know MA laws, but I do know that you are looking at keeping this person on and never being able to raise the rent to a business level. If you are interested in running a charity instead of a business then I say to go for it. If you are looking at a business then I say do not.We had a situation where the association (The business arm of the club) was asked to donate to honor flight because they flew one of our members. We denied it and sent it back down to the organizations who happily picked up the donation (all board members of the association are members of the organizations as well). The reason is that the association is a business entity and the organizations are non profit. You are looking at taking 50% of this asset to live in and the other 50% to be used as a charity. In this case it is not a business item any longer.Just my 2 cents and I wish you the best on whatever you decide.

Brendan L. · Answer

Thanks @Anthony Gayden I am actually using a special local program. Conventional 5% down no PMI 3.75%. Pretty baller.

Brendan L. · Answer

@Orkeem Davis thanks manTo update on this, they finally got that tenant out last weekend, while I moved into a month to month apartment to wait for the closing, which is now set to mid August. So its happening! When they moved him out, the trash truck was more filled than the moving truck, so I anticipate a bigger project than I was expecting, but I've done the numbers 100 different ways, and it will be hard for me to lose money in the long run and will be a relatively low risk way to get experience.

David Faulkner · Answer

Does your contract with the seller stipulate that this unit is to be delivered vacant at close of escrow? If so, do not close escrow until the unit is vacant, as stipulated by the purchase contract. If not, it should've been. You likely still have an indirect route out as mentioned if the loan is for owner occupied and not having a vacant unit to move in would violate that. I agree with Mike, this is not your problem, so don't try to insert yourself into the problem and don't let the seller or current tenant make their problem your problem.

Jessie Niu · Answer

1. Stick to your plan owner-occupying the duplex, which is one of the best strategies to start out. I currently owner-occupy a duplex and own other duplexes. I am loving it. Nothing is better than having other people pay your mortgage.2. I would not inherit this tenant. Don't get the deal unless they can get him out. 3. You mentioned about double-down, how do you get financing while waiting for this one to close?4. I wouldn't rush into a deal just because of the current living conditions. I had to extend my lease with the apartment complex I stayed too while purchasing owner-occupied duplex. It took me whole year to find the ideal one.

Anthony Gayden · Answer

@Brendan Longe"So what about plan B? I could keep him as a tenant and find myself another place."This part of your post caught my eye. I highly doubt you will be able to do that for a few reasons. First of all I am guessing that you are purchasing using a mortgage. I also am assuming that you are only putting a small percentage down through an FHA loan (correct me if I'm wrong).If you decide not to move into the property, you are no longer eligible to purchase it using an FHA loan. That type of loan requires that you owner occupy for a year.If you decide not to use an FHA and instead use a conventional mortgage, it is very likely that even if you owner occupy, you will be required to put 20-25% down. If you go to your mortgage lender and tell them you o not want to owner occupy, they will charge you a higher interest rate because the loan is more risky.What I am trying to tell you is that if you have a mortgage and you decide to no longer owner occupy the property, you need to let the lender know, or they could assume you are trying to commit mortgage fraud.

Orkeem Davis · Answer

Living in the same duplex or 4-family building as your tenants can be very stressful at times. I am speaking from experience, I did it for over 5 years. The tenants always have problems and they want their problems to become the owners problems. I have a SFH and set-up a po box and preferred bank so the tenants can pay rent. Simplify your life if you can. I like the idea of working on several deals at once, but you have to use different financial strategies -- conventional, seller financing, etc. Good luck.

Bonnie McCullough · Answer

I would wait it out. In a few years, you would likely forget about living with someone for a month or 2, but you would never forget the year or more it took to get him to move.