Inheriting unwanted tenants

[Connor Murphy]

Hey BP,

I’m trying to house hack in a very competitive market where multis at a reasonable price in safe areas are few and far between.

I am moving to said area in late July and will be there for 4 years. I have signed a 7 month lease for an apartment to give myself some time to adjust to the area.

A unicorn of a deal just came up, fantastic area with above average rents, clean, updated, and right in my price range. Big issue is that it is fully leased. Now, I was ok with the thought of managing tenants for the rest of their annual lease, assuming that meant until this time next year at the latest. I was just about to make an offer when I was informed that their leases extend until November 2022. Also, they are paying barely half of market rent as they are friends of the seller.

Quick number crunch for you all, fully rented it could gross 4,000/month and cover the mortgage and all expenses. The leases currently in place would gross 2,400/month and I would still be on the hook for roughly another 1500/month out of pocket. Not to mention I’d be renting elsewhere in the meantime. Long term benefit would be I’d have a place to live come next November, and the Airbnb scene (it’s south Florida) is very popular so I could be looking at decent returns for most of the year once the tenants are out.

Is it worth going for it and maybe trying to deal with removing the tenants over the course of their remaining lease, or leaving them in place and biting the bullet for 16 months and count on long term benefits?

Any advice is appreciated.