How to handle a section 8 tenant

Question

Hello,

I recently put an offer on a REO 2 family. One unit is vacant but the other is occupied by a section 8 tenant. My plan is to use a 203k loan to fix the property and rent one unit at market while I live in the other.

My concern is removing the section 8 tenant. How do I have them leave so I can fully rehab this property? The tenant is on a month to month lease which I think would be beneficial in this situation. I already asked the bank if it could be delivered vacant but from how they responded I think they want to avoid that headache. I would like to avoid an eviction as well since that could take months and with the 203k I have a finite time to finish the rehab.

If anyone has some thoughts or advice I'm all ears.

thanks

Max T. · Answer

Start renovating the vacant unit and also give proper notice of non-renewal to the tenant on day 1 of ownership. You will meet the requirement of starting on time, and hopefully will have the tenant out in <2 months.

Charles Joshua Stallings · Answer

Why do you want to get rid of the tenant?  Are they not paying or is their rent far below market?

I’m not an expert but there are very few ways for a landlord to end a lease in New Jersey, but I believe you can terminate the lease with 60 days notice if you will personally occupy the property. I believe it has to stay your primary residence for a year after but someone correct me if I’m wrong.

Daniel Gonzalez · Answer

@Lashawn McCauley I thought of sending a letter 60 days prior but I read that wouldn't guarantee anything. I could be wrong but they aren't forced to leave. I thought about having them sign a new lease since they are month to month stating that they had to leave at the end of the new lease or something to that effect.

@Patti Robertson  I've never heard of tortuous interference, nor was it a thought. Thanks for the heads up. I did think about offering cash for keys but was worried about doing it before I closed on the property. I'll see what can possibly be drafted to protect me in case my offer isn't accepted.

@Max Tanenbaum I thought about starting to renovate the vacant unit and on the start of the renovation ask the tenant to leave. I was hoping that the renovation would make them want to leave so they wouldn't have to live through that.

Thanks for all the input, these are great ideas. I will reach out to my attorney and try to run some of these ideas by him.

Patti Robertson · Answer

@Daniel Gonzalez - The easiest way to get them out quickly will be to offer them cash.  As long as both the landlord and tenant are in agreement, doing a mutual termination and giving them cash to leave will not put their voucher in jeopredy.  I would approach them now and put your offer in writing.  I would offer them double their current rent amount, so they have enough to cover a new deposit and have some play money - which is the incentive. Maybe give them two times their rent if they are out in 30 days, 1.5 times their rent if they are out in 45 days, or 1 times their rent if they are out in 60 days.

You should run this by an attorney if you plan to enter into an agreement with the tenant before you own the property.  You don’t want to end up in a situation where for whatever reason you fail to close, and then be accused of tortuous interference with someone else’s contract, causing the current owner to lose rental income because you paid their tenant to leave.

Lashawn McCauley · Answer

@Daniel Gonzalez I have a rental 3 family property in Essex County NJ.  As @Charles Joshua Stallings stated you will need to send a certified mailed letter to the family 60 days before you want them to leave. Make sure to track the letter. This was my eviction experience for a tenant whom I wanted to leave by the end of their lease.

Charles Joshua Stallings · Answer

With that sort of timeline, I would find a lawyer specializing in landlord tenant law in your area and send the notice to terminate lease even before you close.

Daniel Gonzalez · Answer

@Charles Joshua Stallings thanks for the input. Yes, I will be occupying the residence for at least a year since it is a 203k loan that I'll be using. The 3 main reasons I would like to remove them are: their rent is way below fair market, they are very filthy/hoarders, and I want to renovate the entire property. When walking through their unit there was a clear rodent/pest problem and junk everywhere.

If I was going to self-perform the work I wouldn't be so quick to want them removed as I would have some more time to possibly work something out with them. After speaking to my underwriter I was told I have 30 days to start and then 6 months to finish a 203k project.

How to handle a section 8 tenant

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