Buying house with tenant inside that pay half the market rent

[Noyessie Hubert]

HI All,

State: New Jersey

Quick question. I have 4 identical units of property where all the units need a little work to be on top. 3 units are occupied and 2 of them are paying way below market rent. They are currently paying $1050 and the current market rent is $2000. As you can guess, they have been there for a very long time now ( almost 5 years as I heard ).  And one of them is paying $1600 on a month-to-month lease.

What will you do In this case? Should you evict them? should you try to negotiate a new lease with them? 

Just for more details:
- At the current listing price, my monthly payment on the property will be $6000. I'm using an FHA Loan. I may switch to a 5% conventional loan to avoid the risk of failing the self-sufficiency test. Still looking for one.

- the current rent will be around: $3700

So we will have a difference of $2300 + additional fees like garbage, cap expenditure, rehab loan for the 4 units ( around $350 per month ) and others. Let's say almost $3000.

Thanks for your help.

[Vaughn Smith]

@Noyessie Hubert Make sure you over analyzed the deal. Two things you should worry about. Buying with 5% down you have no equity and you'll be paying down interest for the first few years of the loan which doesn't put you in a good position. Also Irvington is going to increase your taxes significantly after the Reno call the tax assessor and see what the potential increase will be, it's usually ridiculous. As for vacating the units get with a good attorney, but its Irvington so a letter from your attorney may not be enough to get them to leave.