considering purchase of condo with existing tenants

[Gerald Jarreau]

Hello BP users! I am wondering what questions to ask when purchasing a property with tenants already housed. I have an appointment to view the property but wonder when I could see the existing lease and how/when to ask about transfer of deposit (don't want to get stuck owing the deposit back when they leave). Also I don't know how long left is on the lease. Are their other questions to ask?

I'm afraid there is a lot of competition in this particular area and I can't offer the amenities, so already my rent will be at the lower end of the market. This is probably why he is wanting to sell. I will have to lowball offer just to make the numbers work.

[Edward Dean]

If you get the property, then during the due diligence phase you can ask to see copies of the lease(s), verify the deposit amounts, etc. You may want to go an extra step and verify that rents are actually being received by also requesting bank statements and P&L statements from the current owner. Someone may say rent is x but you have no way of knowing that the tenant is current on their rent or actually paying that amount unless you see that amount showing up in the owner's bank statements each month. You will also want to have the tenants sign an estoppel certificate which is where the tenant verifies the terms of the lease.

Talk to your real estate agent about what is standard as far as requesting this info up front or during escrow. In my market, you would generally get the estoppels, bank statements, etc., after getting an accepted offer but before you lifting contingencies.