Buying Duplex, Have to Evict Existing (bad) Tenant? - Atlanta

General Landlording & Rental Properties
7yFollow

Buying Duplex, Have to Evict Existing (bad) Tenant? - Atlanta

Kevin Tran
Atlanta, GA · Member since 2019 · 17 posts · 10 votes

Hi everyone,

I'm new to the rental business and thinking about buying a duplex in Atlanta, GA. I'm Looking for advice on a potential deal. I've given a verbal offer but trying to come to agreement on the existing renter before submitting the written offer.

This duplex is in rough shape inside and out, and will need a full renovation to bring up to rent ready condition. One side is vacant, other side occupied by a tenant who has not been paying rent to the current owner. Based on the pictures, the occupied unit (just like the vacant) would be deemed inhabitable. Leaky roof has severely damaged the ceiling and floors, which are both disintegrating. This deal is from a wholesaler, who is looking to assign the contract he has with the seller. I asked the wholesaler to include a provision in the purchase agreement which requires the seller to have the occupied unit vacated prior to closing while ensuring no further damage to the property through closing. I feel bad displacing people but it's potentially my first buy/hold deal and I'd like to come in with a clean slate. At first the wholesale indicated that should be doable without too much issue. Today, they got back and said the seller is old and doesn't want to deal with evicting the tenant. Wholesaler suggested "should be easy to evict, we'll help you."

I've crunched the numbers and think it'll be a good investment once fixed up. It however comes with a tenant who has not been paying rent. I'm also a little leery of this wholesaler's who is making it sound simple. Reading the GA eviction laws, the process of filing, responding, hearing can take up to a month, plus lawyer and court fees. Not to mention the potential damage left behind be the disgruntled tenant. 

As a rookie, I prefer to step into my first deal as a clean slate, but the deal is good enough to where I would like to explore my options. I thought of renovating one side while letting the tenant rent the other side, then allowing them to rent the renovated unit with increased rent while renovating the other side. But that smells like disaster with a tenant who has not been paying rent. Looking for advice and/or guidance if anyone has dealt with this before.

Thank you,
Trong

0Reply
19 views

Most Popular Reply

Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y

No, I mean I would rather spend my time kicking him than trusting him to help with the eviction.

The DIY Landlord Book4.7248 Reviews
WebsiteView Page
5Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Once the deal closes, the wholesaler is done and walks away. You're the one stuck dealing with the eviction. I wouldn't trust this wholesaler as far as I could kick him and I would probably try the latter before the former.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    4Reply
  • Kevin Tran
    OP
    Atlanta, GA · Member since 2019 · 17 posts · 10 votes
    7y

    @Nathan Gesner thanks for the advice, glad you share the same sentiment about this wholesaler. It’s a sanity check for me. To make sure I understand you correctly: By “don’t do the former” you mean to not put faith in the wholesaler helping with eviction, and by “do that latter” you mean to trying working with the tenant?

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    No, I mean I would rather spend my time kicking him than trusting him to help with the eviction.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    5Reply
  • Anthony Hurlburt
    Salt Lake City, UT · Member since 2016 · 199 posts · 190 votes
    7y

    I thought of renovating one side while letting the tenant rent the other side, then allowing them to rent the renovated unit with increased rent while renovating the other side. But that smells like disaster with a tenant who has not been paying rent. Looking for advice and/or guidance if anyone has dealt with this before.

    I can not see why this would be a good idea. They haven't been paying why would they start now? Why would they ever pay an increase in rent to rent the renovated side when they haven't been paying currently?

    If it's a good deal you could try to renegotiate price based on the risk you would have to take on with the eviction. Another option is require the wholesaler to take on the eviction, but I doubt that would be a viable option.

    0Reply
  • Kevin Tran
    OP
    Atlanta, GA · Member since 2019 · 17 posts · 10 votes
    7y

    @Anthony Hurlburt Yes, I agree that it's probably not a good idea to try this approach with a tenant with a back rent history. And yep, trying to have the wholesaler take care of the eviction via contract language, but think you're right there as well - unlikely to work.

    Well, this was a cry for help and you guys have definitely provided some sanity check: I'm not making it more complicated than it is. If the wholesaler doesn't come back with a more favorable proposition, I will let it go and not be blinded by my eagerness to land a deal.

    Thanks,

    Trong

    0Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y

    @Trong Tran demand the tenant vacated before closing or walk. If you are a new investor, and this wholesaler is pitching this deal to you, it means that either this wholesaler is very new, which would make me weary that it's a good deal, or he's experienced and has pitched this deal to all of his experienced investors, who all passed. I have a feeling this will be a nightmare for you, but could also be a great learning experience.

    3Reply
  • Jennifer T.Pro Member
    Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
    7y

    Good times, good times!  I was in your shoes for the first investment duplex I ever bought.  And I'm having a similar situation at the present time with two duplexes I'm currently under contract on.

    I basically included the time/money costs of a "worst case scenario" eviction(s) into my numbers and made my offers from that point.  The sellers were/are happy because obviously they didn't want to deal with the tenants.  And I'm happy to take that "problem" on for them...for a nicely reduced sales price.  Win-win.

    Big caveat.  I live in a landlord-friendly state where evictions are relatively fast and easy.  For the first deal, I made sure I fully understood the laws and timeframes for a typical eviction.

    I agree with the others.  It's doubtful your wholesaler is going to help you with the evictions.  You can either push the issue the units have to be vacated.  Or expect to do this on your own or hire an attorney or an eviction company that does exactly this type of thing.  And give a 30-Day Notice (or whatever is required in your jurisdiction) right after closing.  Get the ball rolling.  You do not want this tenant.

    I normally don't recommend "cash for keys".  But I don't think it's a bad choice for these kind of situations, just to keep things smoothly rolling along.  Especially when there is a lot of rehab to do.

    Here are my stories:

    First deal was a duplex (bought from a wholesaler) that had been partially rehabbed after the Katrina floods.  And then left vacant for 10 years, except for the seller's brother who was living in one of the units.  Rent free and no security deposit.  No drywall on the bottom half of one kitchen wall.  No flooring in the bedrooms, except the concrete slab.  So "free rent" was about the right price, lol.  I gave him a 30-Day Notice to Vacate the day after closing.  I also offered him $600 if he was out in two weeks and the property was in the same/better condition.  Or $300 if he was out in the 30 days.  I pointed out that I wasn't required to pay him anything.  But was happy to help him out with that bonus money for his next place, if he makes both our lives easier by staying out of eviction court.  He was really mad initially and said there was no way he could move out in 30 days and needed more like 90 days.  I reiterated he had 30 days.  I acknowledged that forcing me to go to eviction court after that would buy him another 2-3 weeks.  But he'd forfeit the bonus $300 and would then have an eviction on his record.  He was gone on Day 30 with no further damage to the unit and all his stuff out.  He put the keys in my hand.  My husband was there to change the locks.  I gave him 300 bucks cash.  Win-win again.  

    The two duplexes I'm currently under contract need substantial rehabs.  I'd consider two of the units uninhabitable and the other two are barely habitable.  But there are tenants living in all of them for $500/month each.  They're all month-to-month.  In decent condition, these units will rent for $1100/month.  It's obviously one of those situations where the current owner rarely/never fixes anything and the trade-off for the tenants is the rent is ridiculously cheap.  Fair enough.  As far as I know, the tenants do pay their rent.  But I'm not going to be keeping any of them, long-term.  I can't do the renovations I need to with people living there, plus I'm assuming they couldn't afford any big jump in rent.

    My tentative plan is to give the tenants in the worst duplex a 30-Day Notice to Vacate after closing and start those renovations (considering a little cash for keys).  A 60-Day Notice to Vacate to the tenants in the other duplex.

    2Reply
  • Kevin Tran
    OP
    Atlanta, GA · Member since 2019 · 17 posts · 10 votes
    7y

    @Jason D. Great points. To your last point, I was thinking "this could be a disaster, but could also be a great learning experience if I had the stomach for it." I was contemplating doing the eviction because the deal checked a lot of boxes for my situation, but for my first deal, I'd rather it not become my first battle scar.

    Thanks,

    Trong

    0Reply
  • Kevin Tran
    OP
    Atlanta, GA · Member since 2019 · 17 posts · 10 votes
    7y

    @Jennifer T. Wow, thank you for sharing. That's great first-hand insight, I'm sure if others are in the same boat as me and are reading this, they can learn a great deal from your experience. I'll probably come back to this post to re-read your reply from time to time. Those are interesting strategies that I'll add to the tool belt, especially working the eviction effort into the sale price of the property. I have heard of the cash-for-keys play, wouldn't be opposed to it (within reasons) for a smooth transition. I can't think of the specifics but eviction process in the state of GA includes posting a notice on the door and/or mail, filing with court, response period from tenant, then hearing in front of judge. This process theoretically takes up to a month, then talking to a friend who's done it before in the state of GA, his took 60 days. You definitely have given me something to think about.

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