Property with a non-paying tenant

[Farrukh Amini]

A 2 unit property that we bid a while ago reached out asking if we’d consider the following scenario: tenant in one unit has stopped paying and is not being cooperative with showings. We’re wondering about how much of a risk this can be and weather we should consider it given how much discount or credit the seller can give us.

Should we consider this deal, and if yes, what would the process and timeline look like to get the problem tenant out?

Thank you for your time and input. 

[Nathan Gesner]

There are a couple risks:

1. Tenant won't allow you to view the unit so you can't verify what you are buying. You could buy it, get rid of the tenant, and then discover $15,000 in repairs.

2. Tenant isn't paying so you would be purchasing a known loss. You will lose rent, you will probably incur additional charges for the eviction, and you'll likely incur losses due to cleaning and repairs. And this assumes you win the eviction!

I wouldn't buy it unless the owner could get you in to do your inspection and I would buy it contingent on the unit being vacant prior to closing. Otherwise, I would walk away. If the current owner doesn't know how to get in or get rid of the tenant then there may be a bunch of other hidden problems caused by their lack of knowledge.