Even if you are a Landlord, I don’t think you can arbitrarily go into your property if you have a tenant in it. I believe proper notice needs to be given first to the landlord who will in turn notify the tenant. (And if the landlord is always “out of town”, then I question the motivation for selling.)
I am currently looking at two different tenant-occupied properties: 1 is a SFR and the other is a duplex. Both have undervalued rents and priced below market value.
But the thing that is beginning to annoy me, even though there is a potential deal in there, is that it is difficult as heck to get inside to look around after they accept the letter of intent. Tenants won’t deal with you directly since they don’t know you so you have to go through the landlord/owner who is not necessarily acessible.
I am thinking about specifying something that I get in within xxx days or the offer is void. Either that or just focus on vacant property only.
I NEVER want to ignore a potential deal but I am not one to like wasting time either. Is it worth dealing with properties that already have tenants in them? They are worse to inspect than the owner-occupied ones! Thanks!
I bought 2 tenant-occupied houses this year. One tenant expressed interest in staying. He was very co-operative and eager to impress me that he would be a good tenant. The second one was originally my competitor since she too wanted to buy the house, but her loan fell through because of credit problems. Initially she was causing quite a few problems for the seller everytime he showed the house. I sat her down and told her that her best chance to buy that house was to rent it from me for a few years, and buy it from me. If she always paid her rent on time, I might even consider financing her. This tenant has been an excellent tenant since I bought the house. Both tenants kept their houses fairly clean and paid their rents on time. I changed the keys of both houses right after closing when I gave them their new leases. It was a way of reminding them who the new owner is, and whom they answer to. So, tenant-occupied properties are not necessarily a bad thing. You just need to check them out.
From what I see, if the deal is good, especially the duplex, don’t give up too easily. Whatever problem they sellers have is there only temporary till you take control. You can also require that the seller get rid of the tenants before closing if they are causes for concerns.
The only problem is, if the seller does not make himself available, he may not be too motivated, or he has problem tenants that he cannot evict because of drugs, gangs, deadbeats, or other reasons. I’ve dealt with that also and came out ahead, but I don’t recommend you try that until you have some experience.
If you were able to reach the seller, and he deliberately ignores you, then go look for another property. If the seller just hasn’t returned your call, try get his address off the internet or from the assessor’s office, and mail him a letter. You could also move on to other properties, and keep an eye on these properties in case the sellers came through.
These look like the kind of properties that you should use a few ‘Suject to’ in your purchase contract to clarify your requirements. We’ll talk about that when you get there.
So far I have only bought one tenant occupied home, and I inspected it prior to their moving in. They stayed 5 years and took good care of the property. It was my one of my first rentals and the experience was a good one. HOWEVER, now that I am a more experienced landlord I am leery of tenants I do not personally qualify. I am in the process of evicting a mobile home (very expensive lesson) because I bought a small MHP with a “pay whenever I feel like working” tenant with an older home.
Try again to get into the houses and let the tenants know that you do not intend to make them move. It may still be a good deal, no loss of rent. CAVEAT - if it smells like a fish is usually is. Listen to your instincts.
HAVE FUN AND KEEP A POSITIVE MENTAL ATTITUDE!!!
In one sense having tenants in a property can make a seller mighty motivated. If YOU have trouble accessing the property, chances are so does everyone else. And uncooperative tenants can have the property looking so bad that the retail buyer is uninterested even if they are able to access it.
I don’t know why you’d be “wasting time”. The landlord notifies the tenant with proper notification that the unit will be inspected on a particular day. You go over on that day with the key or the landlord, knock on the door, and enter with the key if they don’t answer. Where’s the problem?
The problem lies in if the landlord is nearly inaccessible or unavailable when the request is made to gain access to “look around”. Additionally, some of the properties are not using the lock box because the tenant has forbid it.
In any case, thanks for the reminder of the “upside”. If I have difficulties getting in, so will everyone else. That will weed out a lot of people. I stand corrected. I should have rephrased that if I had to wait “excessively” long to get inside.
I think you may have missed Jim’s point (pardon me, if I’m wrong here). Easily accessible not not, its the seller’s job to arrange a time for his own Inspection of his own property… not “a look around.” If he doesn’t have a key to his own property… something’s mighty funny here. There may be more motivation than meets the eye.