Purchasing Duplex with tenants paying under market value

[Colin Williams]

Hello Bigger Pockets family. I've been presented with a deal to purchase a duplex with tenants on a month to month lease. At least that's what I've been told. I'm going to attempt to confirm this before making my final decision. They are currently paying almost $200 under fair market value for the property. It does need to be fixed up, which I plan on doing. I am wondering what is the best way to handle the situation? 

[Nathan Gesner]

Originally posted by @Colin Williams:

Hello Bigger Pockets family. I've been presented with a deal to purchase a duplex with tenants on a month to month lease. At least that's what I've been told. I'm going to attempt to confirm this before making my final decision. They are currently paying almost $200 under fair market value for the property. It does need to be fixed up, which I plan on doing. I am wondering what is the best way to handle the situation? 

My recommendation is that you make an offer to purchase the property with both units vacant. Make the seller deal with getting them out. You take it over vacant so you can renovate, clean up, and place your own tenants at market rate.

If tenants need 30 days to vacate, make your closing 45-60 days so the Landlord has extra time to deal with any renter that holds over. If a tenant refuses to leave, include a clause that extends closing until the unit is vacant so the Seller can deal with it.

If you buy it with the tenants and they refuse to leave, it can cost you thousands and thousands in lost rent, eviction costs, and stress.