I have an amazing duplex under contract and I got it for a great price in Los Angeles. However, a lot of investors are deterred from purchasing it because each unit has two long-term tenants that are paying way below market rents.
Does anyone know what I can advise investors to do to lawfully remove the tenants once they purchase it? The seller is not willing to do it. But once the property is vacant it will be a gold mine. But for now it’s a great property producing little income.
What are the relocation fees associated with evicting tenants?
If the existing tenants are under lease, they can not be removed until there lease expires, even the sale does not void there existing lease!
The problem with this is by paying well below market rents the existing tenants are unlikely to agree to pay a new lease at the market rents level! However since there entitled to stay through there existing lease and because under California law if they refuse to sign a new lease there existing rents go month to month when the lease expires, then when you send them notice to raise rents, and they refuse but indicate there moving, means they probable won’t pay the rent for the month there moving out which forces the exceptance of the current deposit in lieu of last months rents and then being long term the unit probable needs to be gone through and freshened up in order to re lease it to a new tenant.
The problem is it could be vacant 2 or 3 months to change tenants and along with remodeling costs the need to pay a mortgage payment for 2 or 3 additional months is another huge burden when you want and need to make money to pay costs!
Since this is in Los Angeles have you checked to see whether this property is under a fair rent cap?
Since you had to ask us what to do with this, my guess is most of these investors passing on this deal have more experience than you do, and therefore you might be able to learn something from these investors like “it’s not really a good deal” although you may think it is?
Sometimes you need to know when to hold them, know when to fold them, know when to walk away, and know when to run!!!
I wonder if there are any ways to make an agreement with the current tenants. Like paying 2k for each tenant if they sign something to cancel their exisiting lease and move out. Just an idea, not sure if that is ever done or can be legally done.
Without numbers and general location you can’t get a decent answer. I have to assume this is a rent controlled property but that wouldn’t scare me off if price and location is right. But without that info I would be shouting in the dark. The tenants know their rights under rent control and trying to bypass the ordinance with side agreements would be useless and unenforceable. Rent control and a poor return on investment is probably the sellers motivation.
There is another avenue but again that depends on price and location. But think, would it be a place you would like to live, well then kick the lowest rent out and move in. Rent control won’t let you rerent it but they can’t stop a owner from moving in, get it!!! Wink, Wink!!!
Because it’s producing little income could be the reason why he is selling it in the first place.lol Goldmine is right, unless the tenants are on a month to month, there is nothing you can do until the end of their lease. You can file this deal away and make a note to check back when their lease is up.
First thanks for sharing personal problem.
If you want to sue against real estate agent you contact with lawyer who is expert in this field. He give you reasonable suggestion and you know your right and in this way your problem is easily solve.
Thank you everyone for your input. After all of the energy I put into this deal, I’ve decided to walk away from it. Because the property is under rent control and each tenant is elderly, I believe they’re entitled to over $18,000 each!
They’ve agreed to take a little bit less, but enough to discourage anyone from wanting to purchase it. Especially since they also insist on 90 days to move out. No investor would ever want to sit on a property that long before starting to rehab it.
This has been a great lesson for me about trying to wholesale rent-controlled properties with tenants in place.
I’m a realtor from Ohio, just relocated to Los Angeles. I’m waiting for my Cali Real Estate license right now. I’d like to learn more about this particular property, and what the problems are related to it why seasoned investors would not be interested in it.
I have inboxed you my number. Can you give me a call to discuss?
I have to assume this is a rent controlled property but that would not scare me off if price and location is right. I suggest to contact with Los Angles real estate expert they guide to right destination.