Assuming Tenants with the Purchase of Real Property

If you're in the market for rental property, and it isn't a SFR, chances are you've had to view investment opportunities around the current Tenant's schedule.  More often than not the tenants are on an Oral Month-to-Month lease, at least that is what I've found.  This is probably due to poor property management by the current owner, who knows little about investing and is burnt out trying to keep sub par tenants paying on a property they can't afford to improve or manage. 

After eyeing a MFR that I felt was overpriced but strategic to my current holdings I let it sit on the Market, and there it sat for some time (over 1 year).  The current economic climate just wasn't there, and the bank knew it.  So the bank decided to take a short sale on it, and when it was finally reduced I looked at it again.  I immediately knew the tenants would have to go.  The owner was living in one unit, and it was clear to me that one of the many reasons she was facing a possible foreclosure was due to the non-payment of rent by the other tenants.  They were unemployed crack heads, crack dealers, and prostitutes.

If you're reading this blog, here is where I might save you some headache.  I eventually bought this property, and got a great deal on it too.  But what I should have included in the offer was a contingency of the current owner to send a 30 Day notice of lease termination to all other tenants.  That way I could avoid the whole awkward mess!  Coming into possession "Assuming Tenants" is a huge liability.  Mitigate your liability by getting a jump start on the eviction process. Hopefully you won't have to go that far, but you will find sometimes you do.  Include a fill in the blank notice with your contingent offer, and get them out quicker than later!  And, if you want to consider them you can screen them just like you would any other candidate for tenancy and not seem like an unreasonable business person.