Buying with a current tenants in place

[Annie Ruffino]

We just got under contract for a single family home with a tenant already in place. They've been on a month-to-month but it doesn't sound like there was a formal lease agreement (just a verbal).  We want to raise the rent and also do our own screening of the current tenants to see if we even want to offer them to sign lease agreements with us.  In this situation, I assume we would we still have them submit an application (pay application fee) so we can run background checks and all that stuff, then require the deposit, etc.  So basically, it's treated just like any other tenant-placing scenario, right?  It seems like a lot that needs to happen in a short amount of time because if we don't decide to sign a lease with them and/or they don't want to stay with the new rent and terms, then they'll need to be out of the house by closing (early February).  I get the feeling that they won't want to agree to our terms but I also feel like I should at least give them the chance if they check out after the background check.  Thoughts???

[Michael Dumler]

@Annie Ruffino you need to account for your state laws as well. Most states require that you give the tenant at least a 30-60 day notice to vacate, you can't just kick them out on day one after closing. I would negotiate with the seller and have them give the notice and that the property plans to be sold with new management in place. If the property is delivered vacanct, then you can turn the unit around and get a new tenant at market value rents. Hope this helps!