New purchase, current tenant is not current on rent

[David Bowles]

Hi Guys! I recently had a seller (another investor) agree to a 45k purchase price (cash) on a house with ARV of 60k. The house had a full gut rehab 4 years ago when this investor bought it.

The current tenant is “all caught up at the end of this month” but has repeatedly been late in the past. That said, she takes great care of the house and has been there since he placed her over 4 years ago.

The property is in Michigan and right now evictions are suspended due to the Coronavirus as far as I know.

Is this tenant too big of a red flag? Or does her taking great care of the house outweigh the “always getting caught up”? I’d hate to have my first investment property get stuck with a non paying, Coronavirus squatter. Any thoughts/feedback are welcome and appreciated!

[Nathan Gesner]

She probably pays late because the Seller allowed her to. Let her know you're aware of her payment history and that you want to start off on the right foot. She needs to pay "on or before the first day of each month" period. Learn your late fee and eviction laws and be prepared to hit her the moment she violates. You don't have to be mean about it; just be factual. If you're allowed to start evicting on the third day, do it.

I would also keep her on a month-to-month lease. If she continues to screw up, give her notice and try again with the next one.