Purchasing Occupied Units

[Account Closed]

Good morning BP,

I've looked at quite a few duplexes recently. Some are already occupied by tenants. I realize this can be both a good and bad thing. How do you go about dealing with this? What kind of problems have you faced? What can you recommend to me? 

Assuming purchase transfers to lease to your name - or do you need (can you) to create a new lease? Or are you basically stuck with what the previous owner agreed to (rent, policies, etc).

Do you generally have a conversation with the tenants prior? Ask them about their plans to stay, etc? Get income verifications.. Can you do a background check or at that point it's too late? 

Just seems tricky.  You purchase the unit and cash flow is already coming in. However, it's under the previous owners terms.

Any thoughts along the way would be great. 

[Mike Hanneman]

Buying with tenants can be as good as you make it. You make sure to get the original lease from owner. If they don't have the original then you should think that something is going on. I mean as a property owner why would you not have the original lease? Go over the lease and see what is there that you don't like.

I like tenant occupied properties, I invest in multifam units so it gives me cash flow from day one. You just need to be smart about it.