Purchasing Duplex difficulties

[Brian Mahan]

I'm under contract for a duplex and part of the qualifications for the loan was income earned by tenants. One of them is all of a sudden breaking lease and this could up end qualification for the loan. How do I have owner replace tenant with a quality tenant before moving forward?

[Patricia Steiner]

Provide your lender with the tenant leases and cash flow at the time of application.  That will meet that qualifier.  Then, the next step, is to assess the impact on the tenant breaking the lease - not for the lender but for you.  Will the tenant forfeit the security deposit?  What is the condition of the unit if the tenant has vacated.  You will want to ensure that you will be receiving the duplex in the condition it was in (or better) at the time your contract was executed.  After those two steps, ask the seller to begin the process to find a qualified tenant and that you would like to approve the tenant as the soon-to-be new owner.  

Again, give the lender the rent rolls as of the time of application.  Trust me, that lender is going to factor in vacancy as it's just a part of real estate investment life.  You don't own the property yet so you're not responsible for ensuing its cash flow from until closing; put that on the seller.

And, congratulations of your new acquisition.