need help with this situation

Hey guys,

I have a situation. I just signed a contract for a house that I will pay 22K for and the house is worth 65K-70K. I am using a HML for the funding. The house needs 10K in repairs. My only delemna is that the house has tenants that is paying $400 /month. My question is should I give them their 30 day notice as soon as I purchase or let them stay and pay me rent until I sell the property for 70K??

I just don’t want the tenants get mad and destroy the work that I will be doing. Thanks in advance.


You should offer to pay for their moving costs that way they feel that you have approached them in a positive way or you can also offer to sell them the house first you never know they maybe interested.


First, what does your contract say with regards to the tenant? What kind of a lease are they on? If they are on a year lease and have time remaining, you must honor it at the rent stipulated in the contract, unless you have reason to give notice, such as for non-payment. Did you have a copy of the lease? Is there a security deposit to be transferred to you? This is just the beginning of the questions when it comes to buying a property with a tenant.
$400.00 is way below market rent for most areas of Detroit. Either these are very long term tenants, or it is in very poor condition, maybe both. If it is 70k ARV, it is probably a decent area. This is just the beginning of the questions when it comes to buying a property with a tenant.

You say that you are considering letting them stay until you sell the house for 70k. Maybe they will cooperate and happily move their personal items from room to room so you can paint and carpet, do repairs/updates with no hassle. Maybe they will turn into model tenants, maybe even voluntarily increase the amount of rent just because they appreciate you fixing the property up so much. Maybe they will even raise their credit scores 250 points so they can buy it from you when it’s all done. Well, maybe that would happen…

Sorry for the sarcasm there, I couldn’t resist.

Seriously though, for tenant that you want out anyway, it is very simple. You don’t have to negotiate with them to leave. Do not close until they are out AND you have inspected property to make sure it is in the same condition as when you first looked at it. If there are damages found after they move, renegotiate the contract. (I once bought a house where the disgruntled ex-tenant stole the HWT.) Put the pressure on the current owner. The owner is the one who should give 30 day notice, and take responsibility for making sure the tenant vacates. If the tenant is not out in that time, make the seller evict. Stay firm, if the seller knows you are willing walk from the deal, they will get the tenant out, and you will have no hassles.

If the landlord won’t deal with the tenant ( I see this all the time with people who think it is a good idea to rent to family members), drop you purchase price considerably. You are justified as you are taking on a whole lot of risk–tenants you haven’t screened, may have to evict, and on and on and on. You mentioned that you are using hard money for this one. Not cheap. With a tenant who won’t budge involved, that could mean a few months before you can even begin work. Unless this is a clear homerun and you have a few months and a few thousand (or more) to lose, don’t buy with this tenant there!


Hi kimdrake,

Thank you for the good advice. I was leaning towards that anyway, I guess I just needed some convincing.