Existing Tenents?

Rehabbing, Fix and Flip, Rental Properties
1

Hi all,
I’m planning to make an offer on a multifamily property (short sale). The story I’m told from the selling agent is that the current landlord fell behind on his mortgage payments because of bad tenents. He said now the place is fully rented with paying tenents.
What can I do to evaluate the current tenants even though I don’t own the property? Thanks.

JP

2
The story I'm told from the selling agent is that the current landlord fell behind on his mortgage payments because of bad tenents. He said now the place is fully rented with paying tenents.

…and “the check is in the mail”! If I had a dollar for every time I’ve heard that…

I would certainly do as much of a background check on the tenants as possible. Get a copy of their applications from the owner and check them out. You can usually check their eviction history and criminal history from your local court’s website. You should also talk to all the tenants before you buy. Look for telltale signs that they are riff-raff - such as inappropriate tattoos; holding their pants up with one hand; looking like they’re stoned; a filthy apartment, etc.

Good Luck,

Mike

3

Quite honestly, you should not buy a multi unless you can afford to switch out the tenants.

You hope to not have to, and maybe you’ll get lucky, but no seller is going to confess that all the existing tenants are non-paying scum.

If you can’t afford to kick out bad inherited tenants, the project is too expensive for you.

4

Tatertot is EXACTLY RIGHT! I almost always end up churning the inherited tenants in a short period of time.

Mike

5

I can afford to get the place empty. I tend to be consertative and plan with the assumption that I’ll be “cleaning house”. One good thing is that the leases are month to month. Incidentally, I was more curious about tenent privacy issues with personal information.

JP

6

Mike,
Per your advice, I met with the tenants. I felt like I was reading a chapter from your book.
-Tenant 1- He wasn’t there and isn’t on the lease, he unofficially assumed the payments from the previous tenant who is long gone. The apartment was a pigpen.
Tenant 2- Drug addicts- Not what I was expecting in this neighborhood.
Tenant 3- They seem like good people however, they just moved in mid-month- That might be a red flag in itself. I’d like to keep them if they pass a thorough check.

It’s obvious that at least 2 out of the 3 have to go.

JP