Should I try to close with the current tenant still present?

Question

Hey BP!  I've recently had an offer accepted on a 2 family in Albany NY.  The first floor unit (where we'll live) is currently vacant but there is a tenant upstairs.  He has been there for ~8 years and seems to have a good relationship with the seller, seems to be a very nice guy, etc...

Both units need updating, and I'd like to do most of the work downstairs before we move in if possible.  I need to be out of my current apartment by May 30.  My original plan was to write into the contract that the house must be vacant before we close, but that is going to push our closing back to mid/end of May because of the current tenant.

I'm thinking I could close earlier if I'm able to work up a deal with the tenant to still allow him to stay until the end of May.  That would give me much more time to get in and do my renovations downstairs before my current living situation ends.

What do you think?

Leon D. · Answer

Don't know the exact layout of the property, but why do you feel you need to kick-out the upper-floor tenant in order to rehab and occupy the lower floor? If you're trying to be considerate, it seems to me that kicking the guy out after eight years is much worse than him living through a few weeks of noise.

Josh Robbins · Answer

@Joel Barron unless you're going to be working on both units at the same time you might as well collect the money you can for the short time period. If he's been a good tenant for this long and he's choosing to move out on his own, your risk of having to evict him is probably low.

Bryan O. · Answer

Got it. That's some pretty important background information that you left out. It sounds like keeping him around long enough to be ready for renovations is a pretty good path.

Joel Barron · Answer

@Josh Robbins @Kevin Harrison thanks for your replies.  The tenant has agreed to sign a short term rental agreement with me that will cover the period from closing to the end of May.  I still view that as a risk but it's one I'm willing to take since it should allow me to close 30-45 days sooner than if I required the property to be vacant.

@Bryan Otteson the 8 years of good standing with the current owner is why I'm OK taking him on and trusting that he's going to leave when he says.  The reasons I'm OK throwing away the existing income stream are:

• He's paying probably $400 - $500 below market and has told me that even that has been a stretch - so while he's been a good long term tenant for an absentee landlord, renting for that low of a rate doesn't work with my strategy
• I need to update the apartment to get it up to those market rents and to do the work I need it vacant.

Appreciate everyone's input.

Bryan O. · Answer

So you want to throw away an income stream from a 8+ year tenant. I assume that he also keeps his unit clean? And you want to do that because you think it is impossible for a landlord with at least 8+ years of experience to have picked a good tenant? I say go for it!!

Okay, I'm being a bit facetious...

If he isn't on a M2M, tell him that he has to convert to your lease and pass your checks. If he does, keep him. If he doesn't, don't renew his M2M. But don't burn good money just because someone else earned it.

Kevin Harrison · Answer

I would just put into the contract that you need a lease for the guy or some kind of documentation signed by him saying he will be out of the place on XYZ date.

Josh Robbins · Answer

hi @Joel Barron, I think I'm a little confused by your question as well. Is there something that is keeping you from moving in to the downstairs unit and waiting until upstairs leaves in May?  Why would the tenant being upstairs impact your close in anyway? I assume he's paying rent so it seems trying to get creative for two months would just create risk.

Joel Barron · Answer

@Leon D. my original thinking was that I did not want to inherit any tenants, as we are also planning on rehabbing the upstairs unit and bringing it up to market rents.

I'm not kicking him out.  I actually offered a 1 year lease if he wanted to stay.  I should note that he currently does not have a lease.  He is planning on leaving at the end of May either way though because a 3br is too much for him to carry on his own.

The crux of my question is do I

• sacrifice the earlier close for less risk/hassle in dealing with the current tenant
• try to work out a deal with the tenant to allow me to take possession earlier but still allows him to stay until the end of May as he has planned?  If I want to do this, I'm wondering how it would be best to structure it.  Do I get him to sign a short term lease to cover the time between when we close and the end of May?

Thanks for your response!

Should I try to close with the current tenant still present?

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