Newbie Buying with Existing Tenants, Assuming Lease, Questions

[Tyler Evans]

I've got a good deal, off market rare duplex in my area needing light rehab, PP 160k + 20k/unit (40k total) rehab = all in 200k. Once rehabbed, it will rent for $1,000/unit. I am using hard money for part of the purchase and the rehab. My monthly interest payments for 6 months will be $1,650. Rehab should take less than 3 months. Solid ARV is 235k so will be able to cash out refi in 6 months and only have around 30-35k in the deal and cashflowing solidly.

The catch - current lease is at $700/month and is presumably month to month. I do not have copies of the leases, supposed to have those tomorrow morning. It has been mentioned that there could be a 30 day move out clause that would ensure that once the property closes, the tenants would move out within 30 days and then I could start rehab.

A few scenarios:

1. I assume the leases and let them expire and then rehab once the current tenants leave. This would be pretty much a deal killer because I'd be paying $250/month essentially to the hard money lender (current rent 700*2=1,400; $1,650/month to HM lender)

2. The unknown/perfect scenario: both tenants happily sign a 30 day move out clause (does this exist?) and leave within 30 days of purchase, I begin rehab for 3 months, have both units rented out around the 5 month mark, cash out refi at month 6.

3. Nightmare scenario: tenants refuse to leave, I have no grounds to evict. Things get nasty and I lose my a$$.

What do I need to be looking for when I have my hands on a copy of the lease? Does anyone have any experience with a 30 day move out clause when buying a rental? Is there anything else I need to be considering? 

I obviously need to see the lease and gather more information but the house is getting put on the market this weekend and if I keep dragging my feet, I'll 100% lose the deal by Sunday in this market.

I am a newbie so any advice would be MUCH appreciated.

[Mary M.]

You need copies of the lease. Look for the type of contract it is, when it expires and what happens when the term is  up. Generally leases turn in to month to month contracts at expiration - but not always. 

Check your local laws to  be sure you can evict - in some areas there is no no fault evictions