PRO ADVICE PLEASE - my father died & left bad "tenant" / brother

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PRO ADVICE PLEASE - my father died & left bad "tenant" / brother

Henry Senatore
West Palm Beach FL · Member since 2021 · 3 posts · 1 vote

Unfortunately my father had a major stroke and died recently. He left myself (executor of will) in charge and I have 3 brothers (we all get 25% of all assets). Dads house is a fully paid off 2 unit on long island in a nice area (3/1 on top, 2/1 on bottom. We have since filled the top with new tenants ($2,400/mo) which help us keep the property afloat. Recently valued at $700k (to get step-up basis) with finished backyard & pool. I live in FL property is in NY.

Two ongoing situations:

- Dad's (now ex)girlfriend of 4 years (she was abusive/irrational & he was breaking up with her) was listed in his will as able to live at the property for 5 years for $500/month. Any time I ask to buy her out she says "let's talk about it another time" or "the will says I have 5 years". She pays no utilities and our taxes are $13,000 per year. Overall property expenses are about $2,000/mo (tax, electric, solar, oil, water, internet) and we don't have a mortgage! She inherited her own property years ago and stayed in the house rent/mortgage free while her siblings paid all bills, until they got tired of paying and lean was put on house - as it falls apart from no maintenance. We don't think we can get her out but we would love to so we can sell the property and get rid of the headache. She's currently advising my younger brother on situation 2 below...

- The 2 youngest brothers (21 & 23) do not have many prospects & still working on finding careers. Both are far removed from the property/bills/maintenance/etc. One brother started dating the tenant upstairs, constantly stays over, and is even looking to change his address on ID to the property. I'm afraid he will eventually move in and won't pay rent or any bills which will turn into me having to pay all the bills to keep a property i don't live in. He can essentially turn into a squatter and I feel helpless.

QUESTION:

- Is there anything I can do to:

A. get my dads ex-girlfriend out of the house?

B. prevent my brother from moving in & turning the house from a cash flowing asset to a liability costing me money?

-Henry Senatore Jr. (first time landlord in a bad situation)

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Henry Senatore:

Welcome to the BiggerPockets forums! I'm sorry your first post had to be such a difficult situation.

1. You can't buy her out because you haven't offered her enough. I suspect she's saving a minimum $1,000 a month or $12,000 a year. Over a 5-year period, that's at least $60,000 in value. She won't leave unless you give her a serious offer for a significant amount of money. I think it's worth speaking with an attorney to see if you can find another way.

2. You can prevent your brother from moving in by getting rid of the girlfriend living there. Or you can turn this all over to a property management company so it's a business and let them deal with getting him on a lease, paying rent, etc.

I really think you need an attorney or PM involved to separate this from family until you can take full control.

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  • Dan Travieso
    Investor · Fayetteville, NC · Member since 2018 · 263 posts · 216 votes
    4y

    Tough situation.

    In regards to A: You can continue to try and buy her out. You can offer things like paying for the move, paying the security deposit and 2 months rent at new place, etc. Tie the money to something tangible versus simply offering cash.

    B is more tough. You may want to try offering cash to buy out his share of the property. If you own his share then you would have more leverage to get him and his girlfriend out.

    4Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    @Henry Senatore Appreciate the courage to post something like this in the forums. I hope you can buy them out and sell the property (best option). Your Dad did a great thing here and wouldn't want a unhealthy scenario to play out. 

    4Reply
  • Russ B.
    Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
    4y

    Just because someone leaves you something in a will doesn't mean you're required by law to take it.. if the estate is effectively bankrupt, you don't have to bail it out.

    0Reply
  • Jason Maguire
    Investor · Troy, NY · Member since 2020 · 120 posts · 93 votes
    4y

    What if you offered the girlfriend some type of lump sum? Spit balling here, but maybe offer her 10k-15k (maybe less) to move out and find a new place? If the agreement was 5 years at $500/ mo she'd be paying 6k per year- maybe the 10-15k being 3 full years of rent almost may entice her to leave? I know that's a lot, but if you have no mortgage and the house was appraised for over 700k, then you should have a few bills to play with.

    Could you speak to your brother from a man to man aspect about his situation? First off, I'd say it's unprofessional to be sleeping with a tenant. 2) can you talk some sense into him, like "hey man we're literally going to lose Dad's investment if this goes sideways with your gf/tenant & being that we haven't figured the situation out with Dad's gf, this could get messy and us 4 BROTHERs may lose money as a whole, do you think Dad would want that?" I know you said your brothers are far removed from the bills & what not, but i think you'll need to have an honest maybe somewhat uncomfortable conversation with your brother letting him know what you're up against with numbers to back it up.

    Sorry for your loss & I hope you are able to get everything figured out!

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Henry Senatore:

    Welcome to the BiggerPockets forums! I'm sorry your first post had to be such a difficult situation.

    1. You can't buy her out because you haven't offered her enough. I suspect she's saving a minimum $1,000 a month or $12,000 a year. Over a 5-year period, that's at least $60,000 in value. She won't leave unless you give her a serious offer for a significant amount of money. I think it's worth speaking with an attorney to see if you can find another way.

    2. You can prevent your brother from moving in by getting rid of the girlfriend living there. Or you can turn this all over to a property management company so it's a business and let them deal with getting him on a lease, paying rent, etc.

    I really think you need an attorney or PM involved to separate this from family until you can take full control.

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  • Henry Senatore
    OP
    West Palm Beach FL · Member since 2021 · 3 posts · 1 vote
    4y
    Quote from @Nathan Gesner:
    Quote from @Henry Senatore:

    Welcome to the BiggerPockets forums! I'm sorry your first post had to be such a difficult situation.

    1. You can't buy her out because you haven't offered her enough. I suspect she's saving a minimum $1,000 a month or $12,000 a year. Over a 5-year period, that's at least $60,000 in value. She won't leave unless you give her a serious offer for a significant amount of money. I think it's worth speaking with an attorney to see if you can find another way.

    2. You can prevent your brother from moving in by getting rid of the girlfriend living there. Or you can turn this all over to a property management company so it's a business and let them deal with getting him on a lease, paying rent, etc.

    I really think you need an attorney or PM involved to separate this from family until you can take full control.

    A. Unfortunately we put big numbers ($30k - $60k) in front of dads girlfriend but she said things like "I'm not sure" and "I have no idea how I'll find a place"... communication has broken down but prior to that she would often say has never lived/found a place on her own and that she's the baby of her family. Mind you she's 59 riding on my fathers coat tails (and now mine @ 27 y/o). Maybe the only way to get her out is to do all the work for her in finding a place and give her a decent sum so she can leave?

    B. I think this is the more urgent situation because at least now we are cashflow positive from tenants upstairs. After all expenses & vacancy (5%) / maintenance (5%) budgeting, we're pulling in $415/month in Net Operating Income. If we lose that because my brother moves in upstairs and they stop paying, we'll be underwater when savings runs dry. Meanwhile the $415/month profit is going to be split evenly amongst all brothers just as dad would have wanted. But he's got the chance to be selfish and move in. I was thinking to get an operating agreement for the new LLC signed by all 4 brothers, with something mentioning none of us could live there, but I don't know if he would sign at this point. I suppose it's best to look up an attorney / PM at this point to consider all options.

    1Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    @Henry Senatore Yep you need an attorney and like yesterday. I feel for you man. 

    Maybe she'll bite with $10K CASH deposited in her bank account and HELP calling/emailing/looking for a new place. If that doesn't motivate someone nothing else will. A letter of representation could speak volumes and change the tone of the conversation. 50% upfront, 50% once she signs a lease somewhere else. 

    It's either that or you drag this out until next year. She settles in, the brother(s) do what ever, and the cash-flow goes zero. Then the DJ kills the music and the party clears out (party = reserves/savings). 

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    If the girlfriend won't take the cash for keys, then not much you can do unless she stops following the terms of the will.  Make sure the place is maintained and she takes care of it.  If the will doesn't say anything about utilities, just rent-then talk the lawyer to see if you can get her to pay utilities.  You shouldn't be responsible to pay for them.

    With your brother, tell him it is not his home and nothing changes if he becomes a tenant.  If they fail to pay rent, then they will be evicted.  I'd also get a PM to look after the place as you don't live nearby and your brothers are younger and have some growing up to do (which is normal at that age).

    1Reply
  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    @Henry Senatore. Woof, sorry man. Ok you need a lawyer, I think (but am not sure) you have more flexibility since your brother is a part owner not less in terms of a tenancy but my guess shouldn’t be relied on.

    Honestly I think you are in for a rough few years unless you can buy her out (and oh my god get everything in writing).

    If things can limp along till then you should still have something. Send formal letters to everyone as an executor. You are also entitled to reasonable compensation. Lawyer bills should be charged to the estate.

    Decide on your priorities regarding your family relations and estate responsibilities. I think you are in for a rough ride. Wish I had more comforting words

    2Reply
  • David Shakhunov
    Investor · Sacramento, CA · Member since 2020 · 33 posts · 19 votes
    4y

    Like most of the other BP members recommended get an attorney. An attorney could study the will/trust to see if there is a loophole.

    2Reply
  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    4y

    @Henry Senatore

    For option b you outline no, no,no…your brother does not get discounted rent AND a third of the profits. Any rental discount should be considered an advance on his share, otherwise he is taking money from you and your other brother. Put numbers together and corculate

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Henry Senatore why do you need to buy the ex-girlfriend out? Just sell the property as-is and let somone else deal with her! 

    This will also solve the potential brother issue - which by the way, the lease with the upstairs tenant should have clauses NOT allowing anyone to move in without a new lease being signed. If tenant stops paying rent, you can still evict ALL occupants.

    Also, hire an attorney to challenge & interpret the will - it may say she doesn't have to pay rent, but does it SPECIFICALLY state she doesn't have to pay anything else (utilities)? Also, if you can prove your father was breaking up with her, you may be able to challenge her right to stay there in court. You will have to spend money on an attorney, but you've got (merket rent - $500 x 60 months) to "play with".

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  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    4y

    Hey @Henry Senatore - really sorry about this sticky situation, it sounds like your younger siblings don't seem to be the glaring issue here as they haven't signed a lease or moved in as of yet. 

    I would initially focus on making sure to have your younger sibling follow the rules of the property when it comes to staying over and potentially signing a lease if they want to move in. Although, your brother is part owner of this property so he might not respond well to that. 

    Is there no way you can have a frank conversation with your brothers that all costs of the property must be split evenly? If the younger ones disagree, then you can possibly workout a solution of taking more of their equity in lieu of them making any payments. 

    The live-in girlfriend/renter is a tough situation as she is on the will and likely won't budge since she knows she has no where else to go. 

    I strongly recommend getting a real estate lawyer, happy to help with recommendations - shoot me a DM and we'll chat offline. I'm an investor and realtor based in LI. 

    1Reply
  • Russ B.
    Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
    4y
    Before you split up any "profit", I would run the numbers and verify that it is actually profit. Otherwise, you could wind up with a big bill that a couple siblings can't contribute their chunk of.

    For example, are you saving or escrowing money to cover property taxes and insurance when they come due?
    1Reply
  • Wesley W.
    Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
    4y

    Yeah, this is a tough one.  You absolutely need to get an attorney involved.  I think your best course of action from a strictly "piece of mind" angle is to sell the property as-is.  I know if one sells a tenant-occupied property, any lease in place survives the transaction and the new owner has to honor it.  I am not sure if this situation would also apply (see attorney, above).

    This house is in a market with extremely tight housing inventory where it is not easy to find a place to live.  Some investor with a long term vision will see this property as an opportunity and buy it from you.  (They may be thinking "cash of keys" or just wait out this person and enjoy a huge appreciation of the asset in 5 years' time, when the housing inventory is even tighter.)

    The bottom line is you will get less than market value for the property, but you will be disentangled from this mess and you will be able to properly grieve and heal from your loss and turn the page on this stressful chapter in your life.

    Your biggest challenge will be getting your siblings to oblige, as getting consensus is typically the biggest challenge when there are multiple heirs to an estate.

    Best of luck to you and I am sorry for your loss.  Make your first call this morning be to an appropriate attorney to advise you.

    0Reply
  • Henry Senatore
    OP
    West Palm Beach FL · Member since 2021 · 3 posts · 1 vote
    4y
    Quote from @Russ B.:
    Before you split up any "profit", I would run the numbers and verify that it is actually profit. Otherwise, you could wind up with a big bill that a couple siblings can't contribute their chunk of.

    For example, are you saving or escrowing money to cover property taxes and insurance when they come due?
    I use a cash flow analysis sheet which has all expenses considered. I was looking to buy my first single family rental property before all this happened - I ran 100+ of these analyses as practice to help find a profitable deal. Feel free to use this for budgeting if you think it helps!!

    0Reply
  • Suzanne PlayerPro Member
    Attorney · New York City / Long Island, NY · Member since 2020 · 597 posts · 248 votes
    4y

    You definitely need legal representation on this, with the will, sibiling arrangements as co-property owners, & with the landlord tenant issues.  If you need some referrals feel free to message me.

    I would not be surprised if the girlfriend has no plans to move, ever.  From what you told me, she resisted leaving her last residence, even though it caused problems in her own family.  She may think she's better off trying to see just how long she can get reduced rent (or none at all) rather than take a settlement now.  

    If it turns out you can't budge her until the 5 years are up, do you still want to own this particular property?  Perhaps you could persuade your other 2 siblings (hopefully all 3) to take cash now?  You could all invest together in some other property. 

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  • Jason Zingales
    Member since 2019 · 3 posts · 0 votes
    4y

    Maybe I can help you out…I am based out of Long Island.  Send me your info. 

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    4y

    You own (free and clear) 25% of a duplex with 3 others who each own 25%.

    Unit A is Ms. Girlfriend Lady who has (maybe has) a 60 month lease at $500, and intends to stay put for the 60 months--(If you want) talk to an attorney re removing possibility of removing her from premises.

    Unit B The "You don't want to be your Brothers Keeper" unit. Check your lease regarding additional occupants, if it's over your head, talk to an attorney about it.

    The decision making authority regarding this Asset without an LLC operating agreement specifying it is probably Partnership law, whatever that means in your state laws. Check with an attorney about this.

    That's how I see it with all of the drama removed from it.

    Worst case scenario, 60 months of sub-market rent for Unit A, unless that would not ride along to a new buyer (But that was her share of the Will, your share was 25%, as were the others 25%, and tossing her seems like stealing her share of the Will to me, no different than trying to get your brothers 25% for yourself).

    It seem like your Father wanted you to house her rather than give her a percentage and lower everyone elses percentage, and now you are possibly feeling like you don't want to follow through with it.

    She is not going after your 25% share of the will, but you want to go after her share of the will...

    So....

    Good Luck!

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Drew Sygit:

    @Henry Senatore why do you need to buy the ex-girlfriend out? Just sell the property as-is and let somone else deal with he

    Now that's not a bad idea!

    0Reply
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