Would you do a new lease in this situation?

[Elenis Camargo]

Hey BP! My husband and I are closing on our 3rd rental with inherited tenants, but this scenario is a bit different. We live in NYC now but want to move to Jacksonville where our rentals are. This property we are closing on is the one we will be moving into. It needs a complete gut job. The tenants have been there 12 years and want to stay. They are hoarders so it doesn’t seem like they will go anywhere. Next spring we will tell them they have a few months to find a new place and then we will go down to Florida, gut the place, reno and move in.

So here’s the deal. The property was just purchased in December for a quick small profit flip. The new/current owner does not have a lease or security deposit. The tenants have been month to month I assume for a long time. We are asking the tenants to fill out an estoppel agreement just to see if they did give someone at some point a security deposit so that we won’t have to deal with that later. The question is, would you put a new lease in place for a year and then leave them month to month until it’s time to gut the place? Would you ask them for a security deposit if there is none in place? A new lease costs $250 and either way we have to gut the place when they move out so a security deposit wouldn’t do much. Not sure if it’s worth it but then again if there is no lease in place now it’s worrisome. Our two other inherited tenants had leases and security deposits in place. Just wanted some feedback on what you would do in this situation! Thanks!!

[Nathan Gesner]

I wouldn't change a thing. You know it's a loss so why delay the inevitable? The odds of them moving are extremely small because they've gotten comfortable and don't want to clean or expose their filth to the world. Ride it out until you are ready to renovate.

When it is time to renovate, I would try to get them out a full month prior to renovation start because I suspect they won't be able to move in 30 days. You'll need that extra month to work on them.