STOP accepting bad inherited tenants!

[Anthony Wick]

There has been a lot of "what do I do with this terrible inherited tenant" posts lately. No, I don't believe all inherited tenants are bad. I've had some incredible tenants that were inherited. 

But, I'm talking about the posts wherein the person says they knowingly inherited these tenants after the seller told them they were behind on rent, they saw the place was in terrible shape from the tenant, or they knew there was no security deposit. 

People need to get used to writing up a Purchase Agreement that states the seller will give pro-rated rents and security deposits (if there are no security deposits, then you better negotiate some) at close, and no new leases are to be agreed upon after PA is signed. And, most important of all, that a unit will be delivered empty and broom clean at close (if the current tenant is knowingly a bad tenant). New owners should not go from a closing to the court house to file for eviction. The seller should have taken care of that already. 

My last two duplexes I've purchased were delivered empty, for various reasons. I made the seller get rid of a bad tenant (written in PA!). A tenant knew the rents would be going up, so they exercised their option to leave at the end of the lease (right before close). A unit was being updated with new paint and carpet at turnover (so my PA stated seller was not to place their own tenant). It's a great opportunity to upgrade a unit and get those rents up to market value! My last duplex went from $1,100 rents from the last owner to $1,450 and $1,500 (pet) when I filled the vacancies. And only about $5k to spruce up the duplex before filling it. 

If your reserves are so low that you feel you cannot buy a property with an empty unit, then you either better make sure the inherited tenant is gold, or you simply should not purchase that property. Note: it doesn't mean don't purchase, it means just not that property. 

Repeat after me........It's ok to walk away from a "deal", if it isn't really a good deal. 

[Patrick M.]

Sound advice @Anthony Wick, but I will add my take which happens to have the nuance of the NJ anti-eviction realities.

I took my 2 buildings with the derelict tenants and good ones. Had I demanded they be cleaned out then the deal would not happen- nor would the prior owner been able to sustain the requirements for the evictions. 

Of 9:

3 did not have security deposits. The last thing I wanted was for the tenant to get a windfall by the landlord fronting the security deposit... which I would then have to return to the tenant! So I sent out a notice, "requirement for month and a half rent for security deposit under NJ law and you have 30 days to get it to me." One did immediately- the other 2 who were a problem couldn't and moved out. Beauty- let the renovations begin. Not missing out on any rent.

3 who were problems, parking, smoking, nasty were in a 4-unit of which they were the remaining 3. I papered them to death. Notices typed up and mailed, certified mailed and posted on a more than monthly basis. I needed to document things for any eviction and every notice was just another aggravation for them which would result in another nasty phone call or text and would, of course, lead to a new round of notices from me. 

I reached my breaking point during this... still collecting all rents, a couple late, and renovating 2 units. 

I hit my breaking point. And a beautiful thing happened. I came out of it with leather skin and nerves of steel. And then the dominoes started dropping...1 then 2 then 3- they got out of dodge. They couldn't take it... I won and didn't have to go into court, and I had an entire building to renovate and the ability to demonstrate to the remaining 4 tenancies that it is my way or the highway. I have 2 originals left and they are on their best behavior. They know that I would love for them to leave so I could renovate their rent controlled units and list them for $500-800 more. They are very good tenants.

It could not have happened differently in NJ because a MF tenant has a right to renewal but for certain violations. And I could not have learned how to be a true landlord in less than 6 months otherwise.

I think part of the problem is that people don't know how to set the rules. They get so upset when one of us sounds harsh on here. They never had a tenant call your not provided home line and your child answers. Or called in the middle of the night about a pipe burst so you could drive down and find out it was a phantom call. Or got threatening texts.

Again, beautiful thing! I went from c class tenants in a b class building to A class in A units.