Buying 4-plex during Evictions Process: What would you do?

[Bill Goodland]

So I’m interested in putting in an offer on a 4-plex in an up and coming area around the top of my budget to househack by living in one of the units. Listing agent recently told me at a meetup that one of the units is vacant and wouldn’t give a good reason as to why the seller put it back on the market 8 months later and has since dropped the price 20k. I was on my way to the showing today when my agent told me they cancelled the showing. I stopped by on the way to another showing to see the outside and walk the neighborhood and noticed one of the units has a “Notice of Eviction” letter posted on the door. Seems pretty clear that the out-of-state owner is selling due to issues with tenants not paying. Would this deter you as a new investor? Should I just offer cash for keys after closing if I buy the property? Or only make an offer contingent on non-paying tenants leaving and bank statements proving economic occupancy of other units? Of course I would look in each unit before making any offers. Thanks in advance for the advice.

[Michael Craig]

@Bill Goodland

The eviction would lure me in. More problems, more opportunity to make money. Calculate what it would cost to evict the tenant (attorney fees, loss rent, headaches, etc.) put in an additional buffer for profit and submit a new offer. Explain to the seller where you got that new offer amount.

Also, don't be so fast to throw money at the tenant (cash for keys). Figure out the underlying cause of why the tenant is being evicted and talk through a solution.

Speaking from personal experience, it is much easier to evict a tenant if it is your primary residence - there are many reasons for why this is.