Buying a house with renters

[David J.]

I am buying a house with renters in place and need some advice from some seasoned knowledge holders. Scheduled to close July 20th. The rent is about 15% a below market rate and lease ends in October. I have inspected reciepts and diligence on the end of the current owner. Everything seems to be in order.

I know the lease survives the sale. What I am interested in are my options concerning the tenants.

1. Keep them and deal with the rent price in October.
2. Pay them to leave and get the market rent now.

Does anyone have any other ideas or experience with ways to protect or manage the situation. I have a waiting list for my properties. I could put a new tenant in at market the day we close if it was vacant.

Thanks in advance.

[Bill Patterson]

Hi David,
I'd check with the seller to see what the existing tenant's record has been. Do they pay their rent on time? Do they take good care of the property? If the answers are yes, I'd meet them and if they passed my "gut feeling" test, I would rather offer them the chance to stay at market rent. Saves turnover expenses! I would approach them about 60 days before the lease is up, so that if they question the rent, they will have a chance to check your lease rate and sign the lease. If they decide that they don't want to stay, you will have the last 30 days of the lease to find a new tenant. Odds are that they are expecting an increase with the change of ownership, anyway. Good luck!
Bill