Good CoC but possibly inheriting bad tenants

[Victoria S.]

Guys I need some advice. I am under contract for a 4plex. CoC (taking into account vacancy/cap ex and maintenance) is 16%. It is a class B or C. Schools are 9 and 10s.

One out of the 4 units is being renovated and we will choose the tenant. One unit is being leased out to section 8 and she has lived there for 5 years without problems. The 3rd unit is being leased out to a veteran. The previous owners allowed him to forgo paying rent for a few months when he first moved in “to get him back on his feet.” Now they are collecting an extra $200/month in rent from him. He will have that paid off in 8 months. The 4th unit the tenant pays late every month and has accrued a lot in late fees (previously owners charging $5/day in late charges). But they don’t hold her accountable for the late feedback so she has never paid them (according to the ledger). 

My questions:

1. Should we buy this property given the fact that we may need to evict tenants?The previous landlords have let a lot of things slide

2. The previous owners want to make the veteran sign a new lease that includes paying them their $200/month OR want to keep the security deposits to account for this 

Any advice? 

Thanks guys! 

[John Warren]

@Victoria S. inheriting bad tenants is part of the business in the apartment game. I am about to purchase a 19 unit in Berwyn, IL that has several! My recommendation is to always buy the building if it makes sense. Just make sure you have the current owner not renew/change any leases and let all current leases expire once you are under contract. You want the bad tenants on month to month leases so you can get them out as quickly as possible legally. As soon as you take over, let all the tenants know that you will be acting in a more professional manner. You are fair, but won't be making special arrangements. If someone doesn't pay, they don't stay.