Investment property with a previous tenant

[James D'Agostino]

Hey guys,

I might have an opportunity on purchasing an investment t property. There is currently a tenant in the property and the description of the property stated the tenant has a lease until 2023.

I was curious to hearing what are the thoughts on buying an investment t property with a tenant transfer.

Also am I allowed to ask for proof of payment from the tenant or landlord to ensure I’m not inheriting someone else’s problem?

Any guidance on this is incredibly appropriated thank you all for you time and wisdom!

[Nathan Gesner]

James, use the search bar and you'll see this question is asked/answered about 50 times a week.

Your offer to purchase should include a requirement that the Seller provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel is a form filled out by the tenant, then confirmed by the Landlord, then accepted by the Buyer. It's supposed to ensure there are no surprises after closing. For example, I often see Buyers purchase property thinking there is a $1,000 deposit but then the tenant claims it was actually $2,000 because they paid the last month's rent. How will you know? An estoppel certificate fixes this problem.

Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.

Here is an example and explanation: Sample Estoppel

Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.