How do I evict a tenant in order to move in?

Question

I am new to REI and I am currently searching for a multifamily home to house hack. I have come across a few properties that are owner occupied so they will move out upon switching of ownership, however I have also come across a few properties that are fully occupied. I plan on using an FHA owner occupancy loan to purchase a home.If the units are fully occupied and I wish to move in, is there a way to work around this and evict one of the tenants in order to move in? Or is this a serious issue that would make a potentially strong deal fall through?

Thanks in advance!

Bradley Padula · Answer

Hey Rowan congrats on planning your house hack! I would be thinking a few things here:1 - 1st step, Asking my lender, will I even be able to get a loan from you on a fully occupied property, and if so under what conditions you could still get the loan if the property is fully occupied? I'd be asking them would one of the existing lease agreements have to end within the 'move in' window to allow the loan to be given. There is a certain amount of time after an FHA loan closes that you are required to move in but you'd need to check with lender(s) for specifics. I'd ask at least three The easiest bet like you are saying is currently completely empty property, or one that will be vacant upon closing. Then you can fill the unit you wont be occupying with a tenant you've screened, have Your lease in place, have set the rent to what you want etc2 - Eviction cost, process, duration. Talk to a few attorney's. Say you are able to get the loan and the tenant refused to vacate at the end of their lease and you have to go the eviction route it will help to know the rough length and cost of an eviction, both of which can vary greatly. Generally expect repairs once a tenant getting evicted finally vacates.. You'd want to do your due diligence and make sure the deal still makes sense and you have enough reserves to to make it through the months it takes to evict someone I'm directionally close to you (I'm over in MA), happy to connect over a phone call if you want to chat in more detail. Send me a message anytime!

Erickson Sainval · Answer

You will have to look at their lease agreement to see if there is any language about eviction after the sale of the property. If there is no mention you will have to honor the lease. You could always pay them to break lease, but ensure you get that documented.

Rick Bassett · Answer

@Mat O'Grady - condition G, it’s a Connecticut law although I’ve never used it.No landlord may bring an action of summary process or other action to dispossess a tenant described in subsection (a) of this section except for one or more of the following reasons: (A) Nonpayment of rent; (B) refusal to agree to a fair and equitable rent increase, as defined in subsection (c) of this section; (C) material noncompliance with section 47a-11 or subsection (b) of section 21-82, which materially affects the health and safety of the other tenants or which materially affects the physical condition of the premises; (D) voiding of the rental agreement pursuant to section 47a-31, or material noncompliance with the rental agreement; (E) material noncompliance with the rules and regulations of the landlord adopted in accordance with section 47a-9 or 21-70; (F) permanent removal by the landlord of the dwelling unit of such tenant from the housing market; or (G) bona fide intention by the landlord to use such dwelling unit as his principal residence.

James H. · Answer

Great thread, i'm wondering about this very issue right now with a three unit (Fully occupied) I'm interested in. Thanks for posting the question @Rowan Hallahan

Mike McCarthy · Answer

@Rowan Hallahan also check into your state laws. I believe some states have provisions for terminating the lease early for a purchase/move-in. No idea about CT though. An alternative is to have the prior owner get one tenant out prior to closing. Usually, some amount of money will convince a tenant to move out. Of course, it’ll be out of your pocket one way or another, but it might be worthwhile to put it as part of your offer.

Erik Hatch · Answer

You could always offer cash for keys.

Shaun Collins · Answer

@Rowan Hallahan I asked about this about a month ago as it relates to California state law, which got even more strict at the beginning of 2020, and did some more research. With the passing of the new CA tenant protection bill, you must have "just cause" to evict a tenant. Not sure about Connecticut but "just cause" here would include the landlord (or landlords family/spouse) trying to move into the unit. The problem is that if the tenants on a year long lease, that takes precedence and I cannot serve them notice until end of the lease. If they are on a MtM, here in CA you have to serve them a 60 day notice (if they've been there longer than a yr, usually the case) but FHA requires you to be in within 60 days. So there could be some overlap of the tenant uses the whole 60 days and your lender may be unwilling to lend based on that alone. I've put in contingencies where the seller has to have a unit open by COE but that is always dicey for them because if the deal falls through at the last second, they're stuck with a vacant unit. The best method will always be cash-for-keys and can be written into the offer such that if you absolutely need the tenant out and you cant talk to the tenant directly, you can write in additional down payment to the seller to cover what you think would be an appropriate amount to buy the tenant out, get that agreement in writing and present that to your lender (if they ask). Hope this helps.

Mat O'Grady · Answer

@Rick BassettCondition G would apply once you own the property, but you may not get to that point if you can't get a bank to give you the money to purchase the property. I believe that some banks issuing OO loans are requiring a unit to be empty before purchasing the property to ensure that the person getting the loan has a unit to live in.

Mat O'Grady · Answer

@Rowan Hallahan Welcome to BP! As others have said, if you are getting an owner occupied loan such as FHA, then the bank might require a unit to be empty before you close on the property. @James Lapp Was looking to purchase a property in CT to house hack and I believe he may have ran into an issue purchasing a property using an OO loan because of this issue.On another note, we have a small SE CT meetup once a month to talk about real estate meeting. I'll send you a private message about it.

Rowan Hallahan · Answer

Thanks Erickson, I appreciate the help! I will start requesting the full lease agreements and not just what the current unit rents are.