Author Topic: Help me convince my wife it's ok to kick out old tenants when we buy a duplex  (Read 3753 times)

pinkfloyd4ever

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So my wife and I are looking for our first house, a duplex that we're going to live in half of and do an Airbnb with the other half. So obviously any current tenants that might be living in a place we get would have to go.

But my wife is hung up on the fact that many of them currently have tenants. If a place we like otherwise has tenants, she immediately takes it out of the running, like it's a total dick move to kick out current tenants. It's not really a dick move though, is it? Or am I just a dick?

I think my wife is just too nice to strangers. Any thoughts, tips, advice, past experiences, etc?

ysette9

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Is she going to have the stomach it takes to deal with recalcitrant renters, people who break stuff and don't pay, people who make too much noise at night, and other issues? If she is too nice to kick renters out (who know full well that is the risk when someplace goes on the market), then how will she deal with the inevitable issues that will pop up with this business idea? I'd seriously reconsider whether this investment idea is a good fit with your collective personalities. It might end up causing her stress to do what you need to do to protect your investment, or tension between you two if you have to always be the bad guy.

drstarter33

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I had a very bad, really bad experience buying an apartment with tenants in situ. I dont want to bore you with details - but all I can tell you is Never again will I buy a rental property and sleepwalk into the false convenience of keeping the previous tenants.

Cassie

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We bought a duplex with tenants when we were young and I was about 3 weeks away from delivering my 3rd child.  One side was much bigger then the other so had to be in that side. The people had lived there for years and were aware of the situation. They refused to move and we had to be out. I knew legally it would take too long and it was a male gay couple in their 50's who were very clean, fussy, etc. So I go over there and say here is the deal. You have 1 week to get out or the 5 of us are moving in with you with a soon to arrive baby, 2 yo and 6 yo.   They were gone within a week. They left a bunch of junk behind but at least we got in. I would never do it again.

Mr Mark

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If someone has a lease, I guess you may not be able to legally 'kick them out'. Your wife has a point about not being a scummy landlord too. However, part of the deal with renting is you don't own it and thus there is a fundamentally temporary nature to any rental situation. Give them their notice period as per the law and try to be firm but nice. Afterall, it sucks to have to move house. You should get the security deposit etc from the old landlord as part of the deal.

Often landlords will offer "cash for keys" to break a lease, or to get rid of a bad tenant who isn't paying rent. https://www.landlordology.com/cash-for-keys-bad-tenants-move-out/

Pay moving expenses and some extra cash and most tenants will move.

bytre

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Treat the existing tenants with respect, but understand that it is becoming your property and you may use it as you see fit.  As long as you follow the appropriate laws and notice periods, you should be in your right to ask them to move.  Tenants understand that, even if they don't like it.

You may require your seller to evict the tenants prior to taking possession.  This will make your offer less appealing to the seller, as they will take on the risk of getting rid of tenants and having a vacancy, but it is a reasonable requirement for your purchase in this situation.

Over the years I've had the whole gamut of inherited tenants.  Some I got out immediately with a cash-for-keys arrangement, some I gave 30 or 60 day notice to, some I evicted later, and many have become good long term tenants of mine.

Cwadda

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I am inheriting three tenants in a 4 family property I will be purchasing. Reading a few of these horror stories makes me worried but I've had these discussions with the seller and am confident she's done a good job with tenant screening.

redrocker

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So my wife and I are looking for our first house, a duplex that we're going to live in half of and do an Airbnb with the other half. So obviously any current tenants that might be living in a place we get would have to go.

But my wife is hung up on the fact that many of them currently have tenants. If a place we like otherwise has tenants, she immediately takes it out of the running, like it's a total dick move to kick out current tenants. It's not really a dick move though, is it? Or am I just a dick?

I think my wife is just too nice to strangers. Any thoughts, tips, advice, past experiences, etc?

Granted, this is my opinion and I'm glad to share personal experience to illustrate why I have this opinion, but I think it's a "dick move" to kick tenants out *if* you are going to do an Airbnb. Depending on the particular neighborhood, it's probably not going to endear you to neighbors if the previous tenants were part of that community. And in my area, believe me displaced tenants make their voices heard if they're being replaced by a vacation rental unit.

Further, it's quite possible that Airbnb isn't legal in your city, so you'd be under constant threat of the city taking action against you. Not to mention that your mortgagor and insurance company will cause you some grief if they find out (mortgagor could call your loan, insurance company could cancel your policy or decline claims).

As for whether it's a good idea to start fresh with new tenants (the conventional kind), it cuts both ways. Yes, keeping existing tenants can be convenient, especially when you're dealing with moving in, getting settled, keeping your cash flow up while getting your bills figured out. On the other hand, it might be a bit awkward assuming the role of new guy in charge of tenants who may very well have the perception that it's *their* home as much as yours. As someone else mentioned, depending on your city you may be legally obligated to honor their existing lease. When I bought my primary, I decided to keep my tenants and I'm very glad I did. Maybe I'm the exception to the rule.

When I bought a rental property duplex two years later, I tried the same thing with keeping existing tenants and it didn't work. I had to ask one tenant to leave 2 months in, and the other at 11 months.

If you're lucky, this question will be moot if you buy a duplex that's owner occupied and you move into the owner's nicer side.

SwordGuy

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You are messing with people's lives when you force them to move against their will.   It's not "just business."

It's not a nice thing to do.   It's very personal to the people whose lives are displaced.

Look your spouse in the eye and say, "You're right, honey..   It's not a nice thing to do.   I always want to be the person you look up to do the right thing."

Now, if the person is a risk to your family's safety, or lives in squalor, or doesn't pay the rent, that's different.   Then it's time to move pronto.  Be tough then.

If not, and you want them to move, work out a deal that's kind.   Free rent for a couple of months so it doesn't cost them anything other than time to move.  You can refund the money when they leave the property in good order.

Start out your path as the kind of person you want to become.  It's worth it.

cchrissyy

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if your rental income looks good as an airbnb but not good enough as a conventional rental, you probably aren't doing the math very realistically.

vacation rentals get a higher price but the trade off is much more vacancy and wear and tear.
by "much more vacancy" what I mean is in my town, a univiersity town with year-round tourism, you could do airbnb for $x per week and have it rented half the time, or you could rent it conventionally for $2x per month, and in either case, the property brings in $2x per month. But the conventional renting is steadier, less work, and less damage.

is airbnb really legal where you are? are you highly confident that will continue to be true?

Drew0311

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My wife and I currently live in a duplex with long term tenants in the other unit and we also have a single family residence that we rent out on airbnb. We have enjoyed the whole airbnb experience and have hosted guests from all over the world, but here in Indiana, we are subject to a 22% hotel tax which really hurts and makes a long term tenant seem more attractive in some cases. We have had pretty good luck renting it out and earn almost 2x more than when we rented to long termers. There has been zero damage and in fact some guests even buy things for the house and one guy even cut the grass for me. Now as far as living in the duplex...I think it's a great move, my wife isn't really convinced of the badassisty of it, but I'm sure she'll come around. You may have to deal with little issues from time to time, but it's totally worth it to live for free. I would keep the renters in there for the 1st and 2nd quarter and try to get the airbnb going for the 3rd and 4th. We purchased our duplex for just over $50,000 and it's cash flow positive with only one unit rented ($560 rent, $391 mortgage with taxes and insurance included). My buddy, who just became a millionaire, lives down the road in a duplex that he picked up for $40,000 and he rents the other unit for $650. He just started renting out one of his houses in Athens, Greece on Airbnb as well and has had good results so far. So convince your wife and figure out the situation with the tenants and then get to work collecting $ Use cozy.co, square, or venmo to collect rent from long termers. Offer your airbnb guests bikes, uber, car rental through Turo, internet access with a roku, and share some of your local knowledge on the cool spots they check out. Good luck!

pinkfloyd4ever

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Thanks for all the replies everyone.

I definitely do realize that moving sucks, especially if it's against your will.  And contrary to the tone of my OP, I would feel bad about having to kick people out who are happy where they are.

We've been leaning towards Airbnb instead of long-term rental because we like the idea of sometimes having the whole place to ourselves, as well the basement and the yard always being 100% ours. But of course, the drawbacks are that you have to furnish the unit, clean it after every guest, and supply the consumables.

So maybe we should just hold out till we find a place that's totally vacant or, at least has the unit we want to live in vacant.

Abyone else have thoughts on the Pros & Cons of running an AirBnB vs. long-term rentals?

Sofa King

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I would NOT feel guilty at all for telling people they have to move. When you are a renter you should know that can happen anytime or when a lease runs out.  That is how it works. It is your property do with as you see fit.

GoBigRed

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When do the leases expire?  When they are a tenant, there is no guarantee that they get to continue living there year-after-year after the term of the lease expires.  You can't just kick them out, however.   Each state has different rules that you should be familiar with for evictions or what happens for hold-over tenants.   

Maybe look for units where one of the tenants is on a month-to-month status, or has a lease that will soon be expiring.  If its a good property, you should expect that the units in the duplex/triplex/fourplex will be rented, or are mostly rented.  If not, you should be concerned about vacancy and attracting quality tenants. 

If you find a good property that has a lease that is nearing expiration, you can always make it a condition of closing that the Seller does not extend the lease or re-lease to another tenant during escrow, just a thought.  If it has a month-to-month tenant, I wouldn't hesitate telling the Seller that at or prior to closing that particular tenant needs to have vacated.  The Seller may be hesitant unless you have a large non-refundable deposit, in case you back out of the deal.  If you let the Seller know your plans, they should be fairly reasonable.


cchrissyy

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Quote
If its a good property, you should expect that the units in the duplex/triplex/fourplex will be rented, or are mostly rented.  If not, you should be concerned about vacancy and attracting quality tenants. 

Yeah, I'd worry if you focused your search on places with vacancies, by definition you might be looking at many "red flag" investment properties and discarding the successful ones!

clarkfan1979

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If they are month to month, I would give them 60 days. If they have a year lease, I would honor the end of the lease.

I wouldn't actually make them leave. I would give them the option to stay, while increasing their rent to the level that you think you could get as a vacation rental.

If they are paying $1,000/month and you can get $2,000/month as a vacation rental, give them the option to stay at $2,000/month. Then you are not kicking them out. They are choosing to not renew the lease.


Josiecat

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Why AirBNB?  That sounds like a lot of hassle.  Wouldn't it be better to retain the current tenant (as long as they are good renters).  I'd rather have monthly rent coming in than to have to do key exchanges, constantly clean a unit after someone leaves, and piss off the other neighbors who won't be happy with the constant comings and goings.   

Are you sure AirB&B is legal?  Have you checked?

clarkfan1979

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I think airbnb is much less hassle if you (1) have two hosts (2) live on site.

I think airbnb is much harder to pull off when it's one person as the host and they live 10-15 minutes away.


Also, when you live on site, you post that on your ad and you are less likely to get the extreme party animals.


Mr Mark

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Quote
If its a good property, you should expect that the units in the duplex/triplex/fourplex will be rented, or are mostly rented.  If not, you should be concerned about vacancy and attracting quality tenants. 

Yeah, I'd worry if you focused your search on places with vacancies, by definition you might be looking at many "red flag" investment properties and discarding the successful ones!

+1 on that.

Focus on getting a quality building at a fair/bargain price that fits your needs - the tenant problem situation can be solved easily with a bit of time. I'd much rather have a decent property in an attractive area than a piece of crap that's empty.