- Joined
- May 11, 2009
- Messages
- 172
Hey everyone,
I have an opportunity to buy a nice 3bd
2bth detached house in Cambridge for $70,000 less than appraised value
($340,000 current appraisal, signed contract for $270,000). It's in
great condition and only requires some fairly minor renovations to
really make it shine. Paint, some carpeting upstairs, and some exterior
landscaping should do the trick. The sellers want out ASAP so they can reinvest their money in another business now that the market is heating up. With such a discount, I'm happy to oblige them with a quick sale. We would be closing towards the end of May.
My primary goal is to
flip this Spring or early Summer, but my backup strategy is to
refinance to pull my investment money out and then set it up as an RTO.
Because of the large discount, I could own the house with very little (if any)
money invested in it. I'm fine with both strategies, but I'd rather flip
it as it's not quite the longer term material that fits my system.
My
main concern is that the sellers still have a tenant installed with a
lease that is not up until October. They've stated that he's making
plans to leave earlier than his lease end date, but no one's sure
exactly when that will be. I'm telling them not to worry about it
because I don't want the issue to kill off a $70,000 deal. I told them
I'd be fine with taking him on if need be. And if I DO wind up taking
him with the purchase of the house, what are my options for removing him
before the lease end?
The way I see it, I have two options: 1) Let him leave on his own, or 2) Pay him to leave in a timely manner.
Option
1 ` Let's say the tenant stays put while I try to sell. If I flip the
property and find a new buyer, then the tenant will need to leave anyway
before that buyer moves in (with 60 days notice, I believe). The rent
I'd be collecting will help with my carrying costs, which is good, and
the tenant keeps the place clean and has decent furniture, which helps
with showings. However, I'd like to do some renovations beforehand,
which will disrupt life for the tenant. Am I allowed to do this while
he's living there?
Option 2 ` Pay him to leave. It
would be a lot easier on me if he was gone soon after I took possession,
and I'd be happy to pay him $1,000 to $2,000 (maybe more) to facilitate
his exit. If he's considering leaving anyway, I can't imagine why
$1,000 wouldn't seal the deal for him. I'm thinking I should get him to
sign an exit agreement giving him 30 days, and that this should be done
after I've waived conditions on the purchase two weeks out from my
closing date. This means he'd be out two weeks after I take possession.
Of course, I'd have to carry the property vacant without any rent coming
in, but at a potential profit of $50,000 or more, I'm perfectly fine
with that.
Another question is regarding the last
month's rent he would have paid to the sellers. Is that their
responsibility to pay back to him, or does it become my responsibility. I
know the sellers won't give me the $1,400 for last months' rent after
giving me a $70,000 discount. What happens here?
Does anyone here have any experience with clearing out a tenant when renovating or flipping a property? Any words of advice?
Thanks,
Ben
I have an opportunity to buy a nice 3bd
2bth detached house in Cambridge for $70,000 less than appraised value
($340,000 current appraisal, signed contract for $270,000). It's in
great condition and only requires some fairly minor renovations to
really make it shine. Paint, some carpeting upstairs, and some exterior
landscaping should do the trick. The sellers want out ASAP so they can reinvest their money in another business now that the market is heating up. With such a discount, I'm happy to oblige them with a quick sale. We would be closing towards the end of May.
My primary goal is to
flip this Spring or early Summer, but my backup strategy is to
refinance to pull my investment money out and then set it up as an RTO.
Because of the large discount, I could own the house with very little (if any)
money invested in it. I'm fine with both strategies, but I'd rather flip
it as it's not quite the longer term material that fits my system.
My
main concern is that the sellers still have a tenant installed with a
lease that is not up until October. They've stated that he's making
plans to leave earlier than his lease end date, but no one's sure
exactly when that will be. I'm telling them not to worry about it
because I don't want the issue to kill off a $70,000 deal. I told them
I'd be fine with taking him on if need be. And if I DO wind up taking
him with the purchase of the house, what are my options for removing him
before the lease end?
The way I see it, I have two options: 1) Let him leave on his own, or 2) Pay him to leave in a timely manner.
Option
1 ` Let's say the tenant stays put while I try to sell. If I flip the
property and find a new buyer, then the tenant will need to leave anyway
before that buyer moves in (with 60 days notice, I believe). The rent
I'd be collecting will help with my carrying costs, which is good, and
the tenant keeps the place clean and has decent furniture, which helps
with showings. However, I'd like to do some renovations beforehand,
which will disrupt life for the tenant. Am I allowed to do this while
he's living there?
Option 2 ` Pay him to leave. It
would be a lot easier on me if he was gone soon after I took possession,
and I'd be happy to pay him $1,000 to $2,000 (maybe more) to facilitate
his exit. If he's considering leaving anyway, I can't imagine why
$1,000 wouldn't seal the deal for him. I'm thinking I should get him to
sign an exit agreement giving him 30 days, and that this should be done
after I've waived conditions on the purchase two weeks out from my
closing date. This means he'd be out two weeks after I take possession.
Of course, I'd have to carry the property vacant without any rent coming
in, but at a potential profit of $50,000 or more, I'm perfectly fine
with that.
Another question is regarding the last
month's rent he would have paid to the sellers. Is that their
responsibility to pay back to him, or does it become my responsibility. I
know the sellers won't give me the $1,400 for last months' rent after
giving me a $70,000 discount. What happens here?
Does anyone here have any experience with clearing out a tenant when renovating or flipping a property? Any words of advice?
Thanks,
Ben