You received some very good input from Mitch and George. While they gave you some very good general information, I would like to provide some real life drama to the purchase of a tenant occupied home.
We were selling a 2 family home that was tenant occupied and the seller agreed to deliver it vacant. The problem was these 2 tenants who were very aggressive often refusing access for viewings and pointing out defects to potential buyers during walk-throughs. Despite their best efforts we did find a qualified buyer who loved the home and wanted to close asap.
Our buyer had sold her home and was living in a temporary housing arrangement week to week. She really needed to move into this home asap. The tenants refused to move and our buyer was being evicted from her temporary living arrangement and needed at least 1 of the 2 tenants to vacate. In addition, her loan commitment was expiring in a week and she probably wouldn't re-qualify again. It literally took a $1500 payout from the buyer to the downstairs tenant to get them to vacate immediately. This saved the deal and the buyer did not have to sleep in her car.
The lesson from this drama is to buy and sell multi-family homes that are vacant or have tenant eviction proceedings that are in progress. If the seller had attempted to evict earlier or had put the home on the market with no tenants we probably would have sold it at a higher price in a shorter time frame. Our buyer would have avoided the stress of not knowing where she was going to sleep.
Refer to our blog post below:
Bonnie Chernin & David Rogoff
Fillmore Real Estate
2926 Avenue J
Brooklyn, NY 11210
David Mobile: 917-593-4068
Bonnie Mobile: 646-318-5031
Contracts of sale are either subject to tenancy or vacancy. If the contract is subject to tenancy, that means you will have to close regardless if the tenant leaves or not. If the contract is subject to vacancy, that means it is the seller's responsibility to make sure the tenants get out in time.
Usually if the contract is subject to vacancy and there are still tenants in the house, the seller's attorney will want some insurance that the seller will not open themselves up to a lawsuit in the event that the tenants do not move out in time. This insurance is in the form of a clause in the contract stating that if the tenants do not move out in time the buyer would have the right to cancel the contract and get back their down payment or continue to wait if they so choose. This way the seller does not have to worry about the buyer suing him but the seller is still motivated to make sure the tenants get out so as not to lose the deal.
Sometimes it is hard to find 2 family homes that can be delivered completely vacant. If you limit yourself to only homes that can be delivered completely vacant it may be harder for you to find the "perfect" house. You should keep your options open.
If you are planning on renting out one or both of the apartments, I would suggest that you may want to keep the tenants that are already there especially if they are good paying tenants. Good tenants are hard to find and if you have someone who is taking care of the apartment, clean and paying their rent on time... why rock the boat? Also, if you keep the tenant, you will be collecting rent right from the start. If you have to find a tenant, you really do not know how long it will take to locate another good tenant and every month that goes by will cost you.
I could give you even more sound advise if I knew more about the situation. Please feel free to call me if you want to discuss it further. Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665
Cellular: (917) 805-0783
If the tenant has a lease you need to wait until the lease expires inorder to get them out. Your attorney will serve them with a temination of tenancy notice 30 days prior to the expiration of their lease so that the know the lease will not be renewed. At the the end of this period the owner can not accept any rent because this will nullify the notice of termination of tenancy and you will have to start all over again. If you accept their rent it is an acceptance of their tenancy and their lease goes on a month to month. So again don't aaccept any rent no matter what they say...Your attorney will then file and serve the tenants Holdover proceeding, upon service the tenant is given a date to appear in court and all parties try to come to agreement for the tenant vacate the apartment. Hopefully if you both of you can agree on something, a stipulation is written up and both parties sign. If you can't agree the court could legally give them a maximum of six months to find a place and this does not prevent them from paying rent. If the fail to pay their rent this could expidite their removal for non payment of rent a Warrant for their eviction will be issued. The process can take 6 to 8 months, depending your attorney and the courts.
Buying a house with tenants is a challenge that you must go into with your eyes wide open.You must also be ready for the long haul Good Luck on your purchase
If they refuse to move, and who told you that the seller or the agent? thats your first clue. If you need the
house for yourself then only look at vacant homes, or as my co associates have stated get a clause in your
contract that it must be delivered vacant. If the seller refuses then move on to another house. There are many on the market . However, if you need a tenant anyways what difference does it make
as long as they can prove that the are paying their rent. Of course there is no guarantee they will pay you.
So, there is no one answer to your question.
I hope we have all helped you in someway, and not confused you. At any rate if you wish to look for
a home in sheepshead bay and need an agent it would be my pleasure to try and help you find your dream home.
The other issue is what your plans for the home are. Do you plan to have family members occupy the 2nd unit? You would definitely want a vacant home then. Trying to get a tenant out in NY is not an easy task, and is an expensive one. What theoretically might work, or what is the case in another state, may not work here. I had a deal once fall apart because the tenants wouldn't move out, and it dragged on for months. And, it was a single family where rooms were rented out, but they still couldn't get the people out.