HELP!! (Urgent) Tenants From Hell - Deal or No Deal

General Landlording & Rental Properties
7yFollow

HELP!! (Urgent) Tenants From Hell - Deal or No Deal

Fredrick Hock
Member since 2018 · 28 posts · 4 votes

Hello,

I just put a rental property under contract. It cash flows quite well, however it comes with 2 tenants who have a history of evictions (I just found this out today, after I had already put the property under contract). How would you handle the situation? I still have a few days to get out of contract via the Attorney Review Contingency.

The backstory...

The property cash flows quite well (about 12% with a property manager, or about 20% if I manage it myself), HOWEVER...

There are 2 existing tenants who will be coming with the property, and they both have a history of evictions. The tenants just moved into the property earlier this month (March 2019) & signed a lease to live in the property until next year (March 2020). This was already arranged by the seller by the time I had put the property under contract.

My attorney just did a search on the tenants today and told me "they both have been sued a couple of times for evictions. It looks like one of the suits was dismissed (probably because the landlord couldn’t serve them and they probably moved out), but a couple of the suits went all the way to judgment".

That said, how would you proceed? Would you get out of contract ASAP (via one of the contingencies)? Or would you still close on the property and somehow replace the tenants (if so, how?)?

Is there any way I can still buy the property & protect my interests? Especially considering that it cash flows decently?

0Reply
14 views

Most Popular Reply

Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y

What state are you in? is it landlord friendly? They might be ok, you never know. Go look up the eviction records and see if the previous landlords were claiming damage (you need to know how to do that anyway). You might be able to negotiate a discount in sales price for the cost of two evictions in your state.

1Reply
See this reply in the discussion

13 Replies

Jump to latestLatest
  • James NiemeyerPro Member
    Rental Property Investor · Tulsa, OK · Member since 2017 · 60 posts · 36 votes
    7y

    2 out of how many units?

    0Reply
  • Zachary Bellinghausen
    Member since 2017 · 143 posts · 76 votes
    7y

    I would continue with the sale and wait for them to break the terms in the lease, which you can evict them at that time. If they miss rent you can serve them with a  Pay or Vacate Notice, if they violate any other terms within the lease you can serve them with a Notice to Comply and have "X" number of days to comply, or leave. Another avenue would be to offer cash for keys. I have never been in this situation but these are the first things that came to my mind. If the numbers are good and the property would be a good buy, I would go for it and deal with the tenant. Good Luck!

    0Reply
  • Fredrick Hock
    OP
    Member since 2018 · 28 posts · 4 votes
    7y

    @Zachary Bellinghausen okay, thank you so much!!  I will bring these options up with my attorney.

    0Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    7y

    What state are you in? is it landlord friendly? They might be ok, you never know. Go look up the eviction records and see if the previous landlords were claiming damage (you need to know how to do that anyway). You might be able to negotiate a discount in sales price for the cost of two evictions in your state.

    1Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    7y

    One consideration is what state/city is the property in. What are evictions like there? Long drawn out process or quick and painless?

    1Reply
  • Fredrick Hock
    OP
    Member since 2018 · 28 posts · 4 votes
    7y

    @James Niemeyer It is 2 tenants living in a 2BR/1BA apartment (so just one unit).  

    It seems like they have lived together in previous locations (perhaps they are related, although their surnames are different from each other), however they both have records of eviction... so maybe this is something they do on the regular.

    0Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Fredrick Hock:

    Hello,

    I just put a rental property under contract. It cash flows quite well, however it comes with 2 tenants who have a history of evictions (I just found this out today, after I had already put the property under contract). How would you handle the situation? I still have a few days to get out of contract via the Attorney Review Contingency.

    The backstory...

    The property cash flows quite well (about 12% with a property manager, or about 20% if I manage it myself), HOWEVER...

    There are 2 existing tenants who will be coming with the property, and they both have a history of evictions. The tenants just moved into the property earlier this month (March 2019) & signed a lease to live in the property until next year (March 2020). This was already arranged by the seller by the time I had put the property under contract.

    My attorney just did a search on the tenants today and told me "they both have been sued a couple of times for evictions. It looks like one of the suits was dismissed (probably because the landlord couldn’t serve them and they probably moved out), but a couple of the suits went all the way to judgment".

    That said, how would you proceed? Would you get out of contract ASAP (via one of the contingencies)? Or would you still close on the property and somehow replace the tenants (if so, how?)?

    Is there any way I can still buy the property & protect my interests? Especially considering that it cash flows decently?

     I would print out the information you found and *nicely* visit with the tenants. I'd ask them the situation surrounding the evictions and see what they say. There are always two sides to every story. I'd ask them how things are different now. I'd tell them that your investor (my investor is my wife ;-) is very strict about following rental agreements to the "T". The investor evicts if rent is missed by one day or if any part of the agreement is in violation. If they think that might be a problem, you'd refund their money and allow them to break the lease without suing them.

    That will put them on notice and be enough to see if they accept your offer.

    1Reply
  • James NiemeyerPro Member
    Rental Property Investor · Tulsa, OK · Member since 2017 · 60 posts · 36 votes
    7y
    Originally posted by @Fredrick Hock:

    @James Niemeyer It is 2 tenants living in a 2BR/1BA apartment (so just one unit).  

    It seems like they have lived together in previous locations (perhaps they are related, although their surnames are different from each other), however they both have records of eviction... so maybe this is something they do on the regular.

     Hm...I see your dilemma... If you can wait and evict them...but did/do they damage stuff on the way out? I don't think "I" would do it. But as others have said, look into their histories a little more.

    0Reply
  • Fredrick Hock
    OP
    Member since 2018 · 28 posts · 4 votes
    7y

    @Jill F. and @Greg M., the state is Illinois.  

    Honestly, I'm not sure how landlord friendly IL is, or if evictions are quick & painless (or if they are long & drawn out).  I will definitely bring this up with my attorney first thing in the morning though!

    0Reply
  • Jim Cummings
    Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
    7y

    @Fredrick Hock. Two Factors:

    1. Look at the "Big Picture" - if it's a "Good" Deal and the numbers work for the long term - Go for it!

    2. The other factor is do you have sufficient resources and "toughness" to weather some short term pain - getting rid of problem tenants - then it's a GO!

    0Reply
  • Nina Ibrahimbegovic
    Real Estate Professional · Clearwater, FL · Member since 2015 · 72 posts · 14 votes
    7y

    @Fredrick Hock Is your state landlord friendly ? Can you evict is less than a month ? If so, the. Continue with contract. If you live in New York where it is tenant friendly, then I would not proceed with the contract.

    0Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 956 votes
    7y

    @Fredrick Hock, you could also use this as a negotiation tactic, and get more money off the sales price, as the seller has left you with potential eviction proceedings, and potential unpaid rent.

    0Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    7y

    What's the average cost of an eviction in your area? Deduct that number from your offer price. Make the seller pay for his stupidity and short sightedness. he should not have put a crappy tenant in there if he wanted to sell for market value.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free