Buying 5-unit apartment, do I have to keep the tenants (no lease)

[Matt Waggoner]

Hi all...

I am an investor in Illinois (Rockford Area) and am considering a 5 family apartment.  None of the tenants have leases and all but one have been there 4 years plus.  The current owner bought it 35 years ago and has done the bare minimum to make it habitable.  
We walked each apartment today and all but one were ok.  One was completely trashed.  When I say trashed, I mean it looks like a crack house in the basement (and might be for all i know.) See pic below.  Anyway, as it sits now, the property cash-flows pretty well.

At the minimum, all units need windows and doors. One unit need major renovation.

My Choices as I see them:

1.  Buy the place, raise all the rents to market rates (they are well below, but so is the condition of the apartments) and wait for them all to move out.  Renovate and install new tenants.

2.  Evict for health reasons the one tenant.

I asked myself, "if the place was vacant, would I buy it?"  The answer I came up with was, yes. 

Any advice please!!!

Thanks!

Matt

[Craig Wilcox]

If there is no written lease, Illinois considers it a month to month tenancy and requires 30 days notice. I would suggest that you make the purchase of the property contingent on the trashed unit being vacant. Once you renovate and fill it at market rent you can move on to others.