Buying a multi-family with long-term existing tenants in-lease

[Gary Striewski]

Hi BP. This is my first post, looking forward to hearing the thoughts of those who are more skilled than me. I know this question has been asked a million times with a million different scenarios. I’m thinking of purchasing a multi-family locally in Connecticut. One unit (2bed/1bath) is vacant and ready to rent, the other unit (4bed/2bath) has been occupied by the same tenants for the last 8 years per the owner, who also happens to be the selling agent.

The tenants recently signed for another 12 months that’ll take them thru June 2021. Fair market rent for this zip is $1,650/month, the owner gets $1,000, his choice.

I'd want to bring that unit to at least FMR, but don't know how to operate under an acquired lease. Are my hands tied until the existing lease is up?

How have you navigated or seen similar scenarios navigated?

Thanks and looking forward to connecting!

[Darius Ogloza]

The recently signed lease may have been the seller's way to purchase the tenants' "cooperation" during the sales process.  This is something I have seen before.  Makes you wonder if the tenants are the reason (or a main reason) for the seller's desire to get out of this investment.  Tread carefully.