Inherited Tenant on 1st Rental Property Lease Concern

[Gabriel E. Galloza]

Good Afternoon BP community, 

Hope all is well, I'm closing on a property with an inherited tenant whose also in the process of purchasing a home. During the closing process I found out the tenant has not paid rent since December 2019, since the previous owner is going through a bankruptcy. I spoke to my lawyer in regards to my options and i have 3 options:

1) Keep the existing lease (exp Oct 2021)

2) Provide a new 1 Yr Agreement

3) Month to Month Lease

When i initially spoke to the tenant, the tenant was stressed out about signing a 1 yr lease, and i wanted to give him the benefit of the doubt (before i found out about the payment issue).  I told him we can keep the initial lease in play, however tenant has to come up with security deposit (bankruptcy court took security deposit) and 1st Months rent. We shook hands and agreed, to find out a few days later from my realtor, he doesn't want the terms we agreed on, and now wants a new Month to Month lease. He also requested a deduction (what a guy!). I'm not fond of Month to Month Leases, and with that there's also the possibility he vacates the property in October, or November, and it will be challenging to find a new tenant during that time. Im worried that he also picked up the habit of not paying rent, and will do that, forcing me to evict him. im also concerned that with this pandemic, since he will have the courts on his side.

This is my first deal, and i'm already dealing with obstacles, and i feel a bit inexperienced to handle this alone. Thank you BP Community for helping me navigate through these tides. 

With Best Regards, 

Gabriel

[Laticia Braxton]

I think it would be best for you to offer a MTM lease.  You would then be able to get him out faster if necessary.  Since it will be a new lease, you can require him to pay a security deposit equal to one month's rent and you should require him to pay it at lease signing.  NO exceptions and NO payment arrangements. After all, he should be sitting on quite a bit of cash since he totally screwed his previous landlord.

Try not to be controlled by the fear of vacancy. It's a normal obstacle when you invest in real estate, no matter which type of investment you have.  I know that's easer said than done, but you must realize that in your case, vacancy is an opportunity for a much better tenant.  He's already been living there for free, so what do you really have to lose if he's gone?  Put a clause in the MTM lease that allows you to market the unit and show the unit (with advanced notice to the tenant) and market it as soon as he misses a payment!  Hopefully, it is in good condition. 

It sounds like you are a bit overwhelmed, so just take a deep breath and know that this too shall pass and once it does, you will have gained valuable experience as a landlord. Feel free to reach out if you have any other questions.  I'm always happy to help.

Best of luck to you!

Laticia