Buying An REO With Unknown Tenants

[Peter K.]

I looked at a foreclosed four family this morning. Only one unit is being shown--no access to the other three units. Cash only deal--they won't even allow an appraiser into the other three units. It's an all brick building on the corner of a block I already own a house on, and it's priced to reflect the mystery... Good roof, furnaces in 2011... Would need electrical upgrades and the unit that is being shown needs new flooring, tub and shower surround, paint cabinets and new countertops. Even with all of that even a full price offer would be ok by me.

It's the unknown of the other units... I assume they all need the same improvements to get them in the condition I want my properties to be in. The thing that gives me pause is the process of removing three unknown tenants from the property. Could be as easy as 30 days notice or cash for keys, or it could be a game of hide and seek.

Yesterday the listing was updated to indicate multiple offers, highest and best offer needs to be in by 4 p.m. today. I have a couple hours to decide if I want to take a run at this.

Have you ever bought a property with unknown tenants? I assume no rent will be paid and getting the tenants out will be a hassle, but don't know how much of a hassle. Feedback appreciated!

[Peter K.]

I wrote an offer based on the assumption that the three units I couldn't see were in similar (read that, rough) condition to the one I was able to view, and that the tenants would be a hassle to get out.  There were ten other offers--all but one over asking price, I'm told.  Not worth it to me.