Realtor Placed Tenants In Unit

[Quynn Costello]

My partner and I went on an appointment to see a potential deal we would like to fix and flip. The property has been on the market about 4 1/2 months. We saw in the listing that there were currently tenants in the back unit paying $700 a month, which we thought was not a big deal especially if their lease was coming to an end relatively soon. We would simply work on the front house and when the tenant’s lease is up, start on the back unit. When we arrived, we were asking a few questions about the tenants in the back unit, and when we asked how much longer they had on their lease the agent said “Oh, like 10 more months, they just moved in. I put them in there actually and set that up.”

We were kind of taken back by this answer as we have never before heard of an agent putting tenants into a seller’s home while it’s on the market, and are now feeling uneasy about the fact that the tenants still have 10 months left on the lease. This would really drive up our holding costs if we took a year to rehab it entirely, especially since in other circumstances we could probably accomplish this fix and flip in about 3-5 months. Then again, making $700 a month to help with holding costs doesn’t sound too bad either.

Anyone have any similar experiences or any advice to give? Anything is appreciated!

Thanks!