BUYING A TENANT OCCUPIED PROPERTY

Asked by Jerati, Santa Monica, CA Tue Jul 7, 2009

hello trulia,

i'm looking for some advice re a pasadena roperty that is a short-sale with multiple lenders and currently there is a tenant with a least that is due to expire in 6-8 months. i am thinking of making an offer but am concerned about the tenants, and if this is a wise move. i want to occupy the property and am not necessarily interested in a rental. here are my questions:

1) can i buy the tenant out and how would i determine how much to settle with them for?
2) considering i don't own the property, can i even negotiate with the tenants?
3) what are my options - can i force the tenant to leave?
4) will a lender consider this an owner-occupied property and thus require a higher down payment? i do intend to occupy, but the house appears to be subject to the lease. is there an exception i might fall under?
5) is this a deal that i should run from?! i like the house a lot and could see myself settling for a long time and growing into the house.

thanks!

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4
The Roskelly…, Agent, Gambrills, MD
Tue Jul 7, 2009
Your sale contract and the existing lease will determine your rights. Get a copy of that lease before you put in an offer as you will likely be required to abide by all of its terms to lease expiration. Be SURE to collect the tenant's security deposit from the seller at settlement. Otherwise you'll be responsible for re-payment (usually with interest) to the tenant at the end of the lease term. I wouldn't recommend a buy out unless you are getting a really good deal on the house. Down payment/owner occupancy options may be limited so check with your lender, realtor and an attorney.
1 vote
James Baxter, Agent, Encinitas, CA
Tue Jul 7, 2009
Based on the info you have given, I personally would put in the purchase contract that the seller needs to transfer the property vacant. The seller should already have a relationship with the tenant and should be the one to figure something out and handle getting the renters to move out.

I do not see why you should have to deal with this.
Talk to your agent, they should be able to help you out!

If you like the house I do not see why you should not buy it (unless there is something really wrong with it)
1 vote
Lee Bothast, Agent, San Marino, CA
Tue Jul 7, 2009
I am a 2nd Generation Pasadena area Realtor and may know the property and it's situation enough to be able to provide some specifics. Your agent should be able to assist you in detail, however, if you do not have an agent in the area, please feel free to contact me for further property specific guidance. These are many issues and concerns that you should get additional information about before you take the next step.

Regards,

Lee Bothast, CN
Internation Diamond Society
Coldwell Banker San Marino
626.533.3929
0 votes
Fred Griffin, , Tallahassee, FL
Tue Jul 7, 2009
is this a deal that i should run from?!

That was going to be my first answer.

Talk to Lenders, but with the Lease running that long, they are probably going to treat it as an Investment Property, resulting in higher down payment and higher interest rates.

Buy the Tenant out? You could ask them, but have an Attorney draw up an Agreement, and hold the money in Escrow until they are out. And there is the timing issue - getting them out simultaneous with your closing date.

If you pursue it, have a good Real Estate Attorney.

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Best wishes,
Fred
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0 votes
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