Bad Leases and Tenants

[Chaz Sztroin]

I'm actively looking at a duplex near Pittsburgh, PA where the numbers make sense and the option for forced appreciation exists. It's a great location near the hospital and in a thriving community. 

The issue is the existing landlord has no rent rolls available and no active leases in place. The duplex is fully rented but each side is month to month. Upon inspection of the property one side has been taken care of, the other side has not. I get the feeling rents are not coming in and this is the reason for the sale. 

Has anyone dealt with a situation like this? This is my first deal so I'm trying to gain more perspective from someone who's dealt with a similar situation. 

[Jeremy Taggart]

@Chaz Sztroin You see this quite a bit with 2-4 units since there are so many mom and pop landlords out there, with a lot of them being older. Most of the time they haven't managed the property very well or don't have very good records. I would ask to see the seller's bank statements (with everything else blacked out besides rent payments) from the previous 6 months to show proof of rent being paid if you think they might not be paying. Then if they insist the tenants are paying but don't want to show you that info then another option could be to ask for them to escrow 6 months worth of rent payments at closing that would be paid to you if tenants don't pay rent. Sometimes you have to be careful though with this depending on the property/seller and it being a sellers market, the seller may very well tell you to hit the road if you ask for this info, so it's really deal/area dependent. If you are competing with others on a hot property that's listed say on the MLS, and you are asking for this info versus someone else that isn't, they would likely opt for that offer over yours.