Inspection Period - Leases Not Up To Par

[Ken Martin]

Hi BP community, I'm currently in the inspection period on a small multifamily property, and i'm finding that many of the leases are on a month to month basis, some don't have security deposits, and one tenant is actually a month or two behind on payments (the owner is very old and is basically mismanaging the building). This is a building that I will be re-positioning, so it's not a terrible thing that some of the tenants are on a month to month basis, most of them is a little concerning. Also, how should I treat the past due tenant, and the lack of security deposit on some units? Once renovated, there could be some real upside to this property, so it isn't something I want to walk away from completely. 

[Gaspare U.]

@Ken Martin all of this should be represented in the price you are paying. If you feel your bid didn’t reflect the poor quality of tenants then renegotiate. BUT if you are bidding a discount due to the weak financials... don’t expect the old man to offer concessions. 

One thing I would do is talk to an experienced landlord attorney and see what options you have in getting that tenant eviction process started ASAP. Perhaps you can begin before closing. 

Good luck and double check your business plan :)