Potential investment property has below market tenants

[Chris O.]

Looking at a 1960's Duplex on the island - it's been updated inside so no need to renovate. Also won't be living in either unit - I've got one side vacated but the other has tenants that are $400-$500 below market rate. Deal only makes sense at market rates on both sides. Anyone know of any options or is this a dead deal with the new rules passed last year protecting against rate increases

[Julie Toh]

I say, "Vacant Possession – demand it."

My client says, "But wait, we’re buying the property as a rental any ways, so it’s a good thing that it already has a tenant… right?’

I say, "No, an existing tenant is rarely a good thing."

• How is their lease written?
• Does it protect you?
• Are rents reflective of current market rents?
• Is there a provision for annual rent increases?
• Your costs will be increasing every year, cover yourself.
• What is your duty for notice to evict the tenant?
• Why is the seller refusing to give simple notice?

Don’t risk inheriting the seller’s errors and/or headaches.

Whether your new purchase is meant to be owner occupied or an investment property, demand vacant possession or walk away.