Tenant problems During Small Multifamily BRRRR

[Colin O'Neill]

I closed on a top/bottom duplex BRRRR deal where a father and his son were staying in both the top and bottom units. The son on top, and the father living in the bottom. When I closed, I had the seller give a 30 day to the top unit so I could start rehab. That went smoothly and the son just moved downstairs with the father for the time being. The top unit is just finishing up rehab and ready to be rented out in the next week or so. I gave them a 30 day notice that I wouldn't be renewing their lease Sometime late February, so they had until March 31st to leave. I called mid-late March and they said there's no way they'll be out in time and need more time, which I gave them an extra month to do so, so they had plenty of time to find a new home (Mistake). After talking to them many times throughout the month about finding a new place, it seemed the only response is "We are looking, we cant find anything but we'll let you know." Clearly, they don't want to leave, nor does it look like they're going to. Keep in mind, I cannot evict because of the eviction moratorium.

Currently, as far as I know, it looks like the father moved out (who was paying the rent for the bottom unit) and now only the son is living there (unemployed, and claims he cant receive unemployment or stimulus because he hasn't claimed taxes in years). 

Note: This property was bought with a private note at 10% interest with monthly interest accruing around $1100/mo. I can't get the tenant out, so I cannot rehab the property. If I cant rehab, I cant get markets to rent and refi. So my biggest concern is that by the time the work ends up getting done, prices will have dropped (including my ARV) and lending will have tightened so getting money back out will be a much slimmer chance.

Any suggestions on how to go about this situation? Anything will help, thanks so much!

[Lynnette E.]

Is he still paying the rent on your place?  IF so, you may be able to give his dad a legal notice that the rent of his dad's unit will be increased to about $200 over the going rate in the area as soon as you legally can, maybe starting June 1 with notice now?  Let his dad know he is still on the hook for the rent because your rental agreement is with dad not the son and dad has not yet delivered an empty unit.  Do not talk to the son.  He is not your renter.  Talk with the dad.  He is your renter.  And let dad know that if he does not deliver an empty unit by April 30 that you will evict him and son because the lease is with him when evictions open, and you will collect the back rent, including the increased rental amount from whenever your notice allows, maybe June1? until the unit is delivered empty.

With problem renters in the future increase the rent above market rate, then give them the notice to leave.  They are happier to leave then.

[Joseph Cacciapaglia]

I have offered tenants money to leave in the past, to avoid a lengthly eviction (back when I was in another market). It feels terrible every time, but it's effective. It sounds like it might be worth it in this situation. If you go this route, do not give them anything until they're 100% out and also ask your attorney to write up this agreement for the tenant to sign. You don't want them to come back and claim you forced them out.

[Colin O'Neill]

@Joseph Cacciapaglia , I have actually offered to pay for his moving expenses PLUS his first months rent for his next home, but he wouldn’t take it, and claims “money’s not a problem” but it clearly is. 

[Lynnette E.]

Is he still paying the rent on your place?  IF so, you may be able to give his dad a legal notice that the rent of his dad's unit will be increased to about $200 over the going rate in the area as soon as you legally can, maybe starting June 1 with notice now?  Let his dad know he is still on the hook for the rent because your rental agreement is with dad not the son and dad has not yet delivered an empty unit.  Do not talk to the son.  He is not your renter.  Talk with the dad.  He is your renter.  And let dad know that if he does not deliver an empty unit by April 30 that you will evict him and son because the lease is with him when evictions open, and you will collect the back rent, including the increased rental amount from whenever your notice allows, maybe June1? until the unit is delivered empty.

With problem renters in the future increase the rent above market rate, then give them the notice to leave.  They are happier to leave then.

[Colin O'Neill]

@Account Closed Thanks for your insight, I’ll see what I can do!

[Colin O'Neill]

@Lynnette E. When he originally moved downstairs, I added the son to the lease just so I had it documented. I never thought of raising rents actually. I like that approach, and I might actually give that a shot. Thanks so much for your ideas!

[Matthew Paul]

With Covid19 going on and the stay on evictions , you may not have many options , he may stay for a while