9:40 AM 01/19/2012
I am considering buying a multifamily townhouse. Everything looks good; however, the building will not be delivered vacant by the current owner. There are 2 exisiting tenants: 1 with Section 8 voucher lease expiring in the summer and 1 month-to-month tenants with no lease.
Would like to know if there are any red flags or issues with this tenant setup if I would like to vacate the tenants for renovation after I purchase the property. If anybody has experience with this process or know of any foreseeable difficulty beyond giving 30-day notice, etc., would appreciate your comments. Thanks.
The month-to-month could be rent controlled!
11:19 AM 01/19/2012 | 0 Votes
Do not purchase unless the building is delivered vacant. Make the vacancy a condition of the sale. You do not want to deal with the headaches of getting the tenants out.
11:20 AM 01/19/2012 | -1 Votes
Is it possible to have rent control tenants in a 3 family townhouse? I thought only larger buildings. Ideally, I should get the owner should furnish this information before or as part of contract?
11:33 AM 01/19/2012 | 0 Votes
If the two tenants the seller is advertising as "month - to - month" really are, then seller should have no problem vacating those two prior to closing.
I know absolutely nothing about Section 8, so can't offer any thoughts on that.
As a general rule, you want to be able to pick your tenants, not inherit them. This can't always happen, obviously, but you should do your best to get as close to 100% vacant as you can.
It would be a good idea, and not unreasonable, to request copies of the leases from the seller and discuss with your attorney.
1:48 PM 01/19/2012 | 0 Votes
I know people talk about nightmares of tenants, but worth considering before you demand it be delivered vacant that the rent will likely count toward your income when applying for a mortgage. Ours was. Might make a difference if you're on the edge of income requirements otherwise.
2:02 PM 01/19/2012 | 1 Votes
Definitely consult a landlord-tenant attorney first...month-to-month means almost nothing when the tenant doesn't want to leave. If that occurs, no matter what you will lose time and money...you need an attorney to write an eviction notice and file it in the courts, but after that, I would advise you (based on experience) to not use the lawyer to negotiate with the tenant; if possible, do so yourself. Find out what they're looking for, which is usually moving expenses. Otherwise, they will stay and as long as they send you a check, they can. And, if you're battling it out, you cannot cash that check; it must go to escrow. I don't even know how the SEction 8 housing would complicate things; I didn't think the status of those units expired, but I don't have experience with them. This said, I had an amicable experience with vacating tenants, but again, it cost unbudgeted time and money, so just approach from a place of knowledge. Good luck!
3:39 PM 01/19/2012 | 0 Votes
Sorry, I forgot to include that in my experience, the banks have used between 70-80% of the monthly rent roll (based on submitted and leases & rent checks) to calculate income, deducting for potential income loss due to vacancies, so it isn't an advantage to have the apartments filled just for financing purposes. If they're under market-rate, that' s even more true.
3:42 PM 01/19/2012 | 0 Votes
It should raise suspicions that the seller can not vacate the building.
Make sure to lookup your adress on http://www.nyc.gov/html/hpd/ht... (lower right side) and check that your B units show "0".
As long as you have no lease or paper that shows why and under which terms these people are in the building, you have absolutely nothing.
I´d even go as far to have the tenants sign a paper stating the terms before you purchase.
I have had a similar situation, and now - 2 years after purchase and because of many factors, I am still waiting to start my renovation.
It all started with some mystery too - just saying, it can lead to a worst case scenario.
5:30 PM 01/19/2012 | 1 Votes
If you intend to renovate the property, have the seller deliver the building vacant at closing. Make sure it is included in the contract and do not close unless it is vacant. This way the burden is on the seller and he has financial incentive to do so. Your "month to month no lease" tenant can easily tie you up in housing court for 6+months if he knows how to use the system. If you are not going to renovate, why not get credit/background checks, and personally interview the existing tenants, they may be fine to keep on.
6:26 PM 01/19/2012 | 0 Votes