Posted by Rich-CA on December 01, 2008 at 09:59:02:
about anything of importance to a buyer of the property. I personally would NOT accept an income/expense report because those are easily faked. I would REQUIRE the Sched E because if he lies there its a jail sentence so its more likely to be true than any report he types up in Excel or whatever.
Opinion–Buying a Duplex Occupied - Posted by Jeff
Posted by Jeff on November 26, 2008 at 08:06:30:
I am looking at a few duplexes that are occupied. I am not getting any information from the seller on income/expenses to examine(late rents). Most of the renters have been there less than 3 months. These duplexes are not attractive,but have good cash flow and are built sound(100% brick and only duplexes on the street). Rents are at market, but the owner is motivated to sell and is giving a good price. He’s scared to death about capital gains next year so I am benifitting this year. I have never bought rentals that had tennants already. Do I get rid of the old tennants as their leases expire? Any suggestions would be appreciated. I have searched the archives in many ways and can’t find anything pertinent.
Re: Opinion–Buying a Duplex Occupied - Posted by John Merchant
Posted by John Merchant on November 27, 2008 at 10:44:09:
Over the eons I’ve managed to pick up several properties with tenants therein…some good but mostly some real losers that the owner/seller was sick of messing with.
2 or 3 of these properties were picked up for nothing down and subject to their debt because the Owner was so motivated to walk away.
Do heed the prior advice you’ve been given here of getting all the info that seller had on those tenants, and what and when they’ve paid, security deposits, etc. so you’ll know as much as possible about what to expect from them.
I would screen the tenants - Posted by Rich-CA
Posted by Rich-CA on November 26, 2008 at 18:17:18:
I would require copies of all of the documents (application, lease, correspondence) for any tenant in place along with signed statements by each as to the amount of security deposit they paid and when. I would run the same background check on each that I would use for any new tenant. I would want all the financials, especially the Sched E on the property to see what expenses and so on they reported to the government (if its different than what they were trying to sell me, then this is a bad sign). I would want copies of receipts for all claimed expenses (to see what exactly are the maintenance being required by the property).
Be careful. Some people put any warm body in just the be able to claim its fully rented and they are not people they would want to have in a property they own. Or they are selling a problem so it can be someone elses. Had the later happen to me. Don’t let it happen to you.
Re: Opinion–Buying a Duplex Occupied - Posted by James Harris
Posted by James Harris on November 26, 2008 at 10:04:48:
I would buy with tenants already in the property. However, I would be a bit concerned if the seller would not share vital information such as the income and expenses of the property. If the rents are at market, simply raise the rent if the market would bear it. It would be silly, I beleive, to get rid of a tenant unless that one gives you problems.
Re: I would screen the tenants - Posted by jeff
Posted by jeff on December 01, 2008 at 08:25:39:
I think you’re right about the warm bodies. I can’t get him to give me any kind of expense/income report or schedule E. Thanks for the info.