First Purchase, First Eviction, Massachussets

[Mark Horn]

Hey all,

It's finally happening.  A deal popped up that matched my criteria and they accepted the offer.  We are currently waiting on the appraisal as the last obstacle but I have a credit only commitment and we feel the property will appraise without issue.  Some quick details about the deal for any feedback/critiques:

$490,000 purchase price.  2 structures on a .2acre lot.  One is a 2 unit (2 bed 1 bath per unit) properly zoned, and there is a free standing cottage, also a 2 bed 1 bath.  So its a 3 unit purchase.  2500 total sq ft.  750sq ft unit 1/cottage, with a small garage.  Forced hot air/natural gas.  The 2 unit is hot water heat, I pay that bill.  Separate electric.  Roughly 600sq ft upstairs in unit 2, 1100 sq ft downstairs in unit 3.  Basement as well, where I plan to add laundry and storage options for the those tenants.  It's a corner lot, great curb appeal, near a hospital and an engineering employment base.  Located on Cape Cod, there are very few mutli's that I've seen, so I consider it to be fairly rare.  New roofs in the past 10 years, furnace/boilers are all pretty new.   Overall its in fairly decent condition.   I am projecting rents around $4500, so a little shy of 1% rule but I still feel the numbers work.  I also think there is room to increase the rents but I wanted to be conservative in my math. 

I am putting 20k down and using FHA financing. Hoping for a rate between 3.5-4% and will likely buy points if they are priced right.

PITI should come in right around $3000, another $200 a month for water and heat. I plan to put away 17% of my gross monthly for cap ex, repairs, vacancy, etc.

EVICTION:

The cottage is currently vacant, the upstairs unit will be delivered vacant in the 2 unit, and the downstairs is currently tenanted. The tenant is allegedly a tenant at will, with I believe her late husbands VA voucher/section 8. My understanding the original lease would have named her and her husband as tenants. She contests this, but it is clear her adult son is living in one of the rooms, attempting to grow pot in the closet, has punched holes in the wall/destroyed drywall, etc. He was incredibly combative and aggressive towards the current owner during the showing. The owner filed notice to quit, I believe a 30 day no fault, and has entered the complaint with the court as of 9/16. The original hearing date is 9/26, but I suspect she will file for discovery. Our closing date is projected to be 10/15 and I seriously doubt this eviction will be finalized executed by that date.

So we can 

A) pursue the eviction as new owners.  Which I would assume exposes us to any counter claims/defenses she had based on how he was as a landlord prior to us owning. 

B) start fresh and if needed pursue our own eviction from a clean slate

If it was only the mother staying at the apartment I would probably be inclined to let her stay, but with the complication of the son staying, and some very unsavory company he appears to keep, we really want to regain possession of this unit and put our own tenant in place.  (I say we as me and my girlfriend/partner will both be living in the cottage together, although the property is fully in my name)

Just curious to hear from anyone who has had eviction experience like this, and specifically anyone who has purchased during an on-going eviction.