How to get this tenant out? And another question...

Question

Hello BP Family!

Okay, so I am in the process of acquiring a property from a bank, that currently has a squatter inside.  Apparently this guy used to pay rent until the previous owner lost the property to the bank, and the bank wouldn't make any repairs, so the tenant used opportunity to avoid rent until the new owner takes over.  There is no lease in place.  I will be closing on 1/31, but I would like to get the process started asap.  The property is in Michigan.  I have spoken to the tenant once, and he stated that he'd like to stay there, as he's been there for 3.5 years, and he loves the house, but it's just that "some things need to be fixed".  Of course, I plan to make some improvements, but I have tried to reach out to the guy several times since I first spoke to him, and he has not answered my call or returned it.  At this point, I do not want to rent to him.  So what's the best way to get this process started?  Should I write him a letter to get the ball rolling since I don't technically own the property yet?  Or should I just wait until I close, and begin the eviction process?  Also, should I just do a 30-day notice to quit?

Finally, my last question is this...I was told that in the state of Michigan, if your properties are owned in the name of an LLC, then you need to hire a lawyer for all evictions.  Does anyone in the state of Michigan know if this is absolutely true?

Thanks in advance for all the help guys!

Katrina

Steve Babiak · Answer

When I offer "cash for keys" - I don't name a price first, just like in any negotiating.  I simply say I can pay an attorney to evict or I can offer some money to help you move.  If they seem agreeable, then I ask how much they think they'll need.  If not given a number, I start low at $50.  Since they are short on money, they agree at lower numbers than you might expect (as low as $100 for one I did); if they want too much, you just say that it seems they want you to get an attorney involved.

Rob K. · Answer

Katrina P. I'm in Michigan and have experience with the courts. As far as an LLC needing a lawyer, that depends on the court. Some courts allow an LLC to represent themselves and some don't. The head judge of the court sets the rule.

I don't think this person can be considered a "squatter" since he moved in legally. In Michigan, if a landlord (the bank) is not making repairs, the tenant is required to still pay rent, but to put it into an escrow account. If this tenant is doing that, he has a legal right to be in the property and is not violating his current lease.

I think you will need to wait until you physically own the property to start the eviction process. You will then need to serve him with a 30 day notice to quit and start the eviction process if he's not out in 30 days.

Also, he might not be a scumbag. He probably feels ripped off by the previous owner for paying rent while the owner didn't pay the mortgage. Now he has to deal with a bank that won't make repairs and he probably can't get ahold of anyone there. I'm sure it's frustrating.

I would contact him (after you close on the property) and tell him that you are the new owner. If you want him out, let him know at that time that you want him out and serve him with a 30 day notice. I would tell him that if he's out by a certain day and the house is clean, you will pay him a few hundred dollars. It will save you a lot of grief and court costs.

Good luck.

Katrina P. · Answer

Hello everyone and THANK YOU for all responses.  They were helpful, as always.  Anyways, I decided to send the guy a letter to introduce myself as the "Property Manager" for the owners who are taking over as of January 31st.  I sent him an application, and asked if he could have it in by January 31st, as we will begin our management duties as of February 1st. I know he may or may not adhere to this request since technically he doesn't have to since we don't yet own the property.

But to those that asked about the price, it's a duplex (3 bedrooms on each side) that I'm getting for about $10k.  It shouldn't require more than $5k to get it up-to-snuff, and I can rent it out for $600 each side, and utilities are completely separated (besides water), so I'd say it was a pretty good deal.

I'll keep you guys posted with how this thing pans out, but any additional comments are always welcome!

Katrina

Aly W. · Answer

I'm with Mary Joe and Joel Owens. I once gave a tenant $300 to leave after her rental assistance was cut. She said she had nowhere to go and the last thing I needed was a eviction. For $300, she agreed to stay with friends.

And in high crime areas, a squatter can be considered a type of alarm system. We had a vacant house for about 6 weeks between tenants, and it finally got hit - all the copper stolen.

Joel Owens · Answer

I agree with Marcin. Make sure you are getting a really low price if the bank will not get out the tenant as a condition before closing. Sometimes I will see a little bit less price with a tenant in it because the bank doesn't want to deal with it. The problem is the deal isn't a deal if it's just  a little less than buying vacant. The reason is you can lose months of rent or being able to rehab and resell and on top of that there can be massive damage done before you get the tenant out. All of that leads to the bank has to agree to a massive reduction for me to take that on.

If it is a high crime area you might want the tenant there anyways as the time the bank got them out and between closing the place could get ripped apart (copper, plumbing, wiring etc.)

If the area seems like a nicer area that is safer than having it vacant for a little bit before closing the odds are less it will be vandalized before you get into it.

Mary Joe · Answer

I did that once and it did work.  I told my tenant I could either pay the eviction attorney $500 and ruin his credit in the process or I could give him the $500 for him to move out peacefully with his credit intact.  He readily accepted the $500.

Either way he had to move out so I think it was a good deal for him to save his credit and have $500 in his pocket.

For me, I had to pay $500 anyway one way or another, so it was a good deal for me too because less hassle.

It was a win win situation for me and my tenant (although deep down I wouldn't pay him a penny for what he did but then the other alternative brings more headache...).

Marcin G. · Answer

its an REO then ...ask ur attorney to write an addendum to the contract that prior to closing the property needs to be vacant. bank should take care of the problem (actually REO listing agent acting as a "property manager" will do that) ...thats my experience in IL

Aaron Junck · Answer

I havent had to do it but I have heard of others doing this... If you want someone out and they aren't willing to get out, offer them a little bit of cash... yes cash .. if you go and say here is a few hundred bucks to help with your moving costs. 1 they will think they hit the lottery, 2 they will more than likely be shocked and move out, 3 odds are they wont damage the property to move out. key thing is to give them the money once they have vacated and not before they do. Just a thought.

George Paiva · Answer

Not sure about Michigan but in CT.

If property is in LLC then you need attorney to handle the eviction.

You can't do anything till the property has been acquired from you.

If the tenant likes the place then just satisfy him for now by fixing a few things to get him happy enough to pay rent.  At least gives you a little time to figure out next steps.  Have him fill out an application and do all necessary background checks as you would any tenant.  If he does not meet your criteria try to get him to agree to a month to month.

Oh and BTW why would you think he would stay in coorespondance with you if you do not own the property???  You maybe jumping the gun here.

How to get this tenant out? And another question...

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