I’m hoping some of you can share your thoughts or past experiences…
I’m getting ready to sign a contract on 6 rentals from the same seller. 4 of them are currently rented, and according to the seller, are good rentors. My question is what about the deposits the current rentors paid the seller. If and when they move (after I own them) and they want some deposit $ back, should he be responsible for it? I figure they’ll be looking to me for it.
Your thoughts???
You should be getting the security deposits transferred to you at the time of the sale.
Thanks, Rich…
Good to know before signing the contract!
You need to let your title company know what the deposits are, then they can give you a check at closing or deduct them from your closing costs. In your purchase contract you should have the realtor write in that the deposits are to be paid at closing.
As far as the current tenants being good, then why is he selling if he has good tenants. Ask him to show copies of the checks. That way you can tell if he is getting paid and if he is getting rent on time. I have learned the hard way that sellers usually sell because they have put horrible tenants in their properties. So get copies of the last two months of rent deposits.
Thanks Iron,
Great point. I’ll ask for that tonight…
gwest,
You should read all current leases and check out the tenants to the max extent possible. Make the current landlord show you the credit reports on the current tenants - you can not run new credit reports without the tenant’s written permission. However, you can do a criminal background check on the tenants and that is probably more important anyway. Remember to look at the lease terms. You are not only buying the buildings - you are acquiring the leases (and you will need a copy of those). Sellers lie, be sure to verify EVERYTHING!
Good Luck,
Mike
If your filling out the contract tonight make sure that is says
-seller pays 3% of closing costs
-continguient on financing
-continguient on final inspection
-deposits to be handed over at closing
-and include a list of all appliances
p.s. Don’t pay sticker price, always fight for a great deal, its the only way to buy properties. Start low and work your way up until you have a compromise somewhere in between. Don’t over spend! If your Realtor won’t fight to get you a great price then immediately fire them.