Author Topic: House-hacking advice needed  (Read 1488 times)

RethinkTheRatRace

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House-hacking advice needed
« on: September 18, 2017, 12:31:25 PM »
So, this isn't going to be my first rental property, I have a duplex and two condos, but I'm trying to get into multi-family properties more. Anyway, I've found a quadplex (townhouse style, not that it matters) that is at a pretty good price. The owner let me know that the property is fully occupied, and that all the tenants leases are month-to-month which is beneficial for me because I feel that the rents are underpriced for the area. And, I need one of the units empty because I'll need to move into the property.

Anyway, onto my question: Has anyone ever made an offer on a property contingent on the seller evicting a tenant? Is there anything I should be worried about with this, or any problems I could face?

Thanks in advance!

sailinlight

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Re: House-hacking advice needed
« Reply #1 on: September 18, 2017, 12:44:21 PM »
I'm not sure why the current owner would agree to that. If he evicts (non-renewal of month-to-month lease) a tenant and then the sale falls through, he has to re-rent the place and lose out on at least a month worth or rental income. Unless you plan to offer significantly over market price to account for this risk..
Why don't you just buy the place and then non-renew one of the month to month leases after closing?

RethinkTheRatRace

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Re: House-hacking advice needed
« Reply #2 on: September 18, 2017, 01:00:06 PM »
I'm not sure why the current owner would agree to that. If he evicts (non-renewal of month-to-month lease) a tenant and then the sale falls through, he has to re-rent the place and lose out on at least a month worth or rental income. Unless you plan to offer significantly over market price to account for this risk..
Why don't you just buy the place and then non-renew one of the month to month leases after closing?

I could do this, and for the sake of putting in a lower offer, that's likely what I will do. I was just hoping that the seller could do all the leg work on that because I worry about how long it'll actually take to evict a tenant. I know in my state I would have to write a letter which would be a 30 day notice, then 1 month of waiting, and then if they don't move out it would be escalated to a court issue. And the dilemma I have with this is, would this affect my "owner-occupant" financing if after months, I'm still not living in the property. I suppose that the best case scenario would be that I purchase the property, go to each of the tenants, and mention that their rent will be increasing and they'll need to sign new leases, and maybe one of them will just leave on their own accord?

Dicey

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Re: House-hacking advice needed
« Reply #3 on: September 19, 2017, 04:45:35 AM »
My first thought was just to raise the rents enough so that someone gives notice and move in when they vacate.

My second thought is, "What's your rush?" Why kick someone out of their home immediately?  Seems like karma and maybe the Golden Rule deserve a little consideration here.

Reggie

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Re: House-hacking advice needed
« Reply #4 on: September 19, 2017, 08:43:09 AM »
I've tried many times to make offers on properties conditional upon on them evicting the tenants. But it has never been accepted.  In my province (Ontario), it's very difficult to evict tenants and could lead to a lot of legal headaches so always hope that the owner could just come to some sort of agreement with their tenant.

It's always worth a try. If someone really wants to sell, they should try to accommodate. But you would want to make your offer conditional upon getting a signed form or statement acknowledging that the tenant is leaving on a certain date.

RethinkTheRatRace

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Re: House-hacking advice needed
« Reply #5 on: September 19, 2017, 01:41:35 PM »
My first thought was just to raise the rents enough so that someone gives notice and move in when they vacate.

My second thought is, "What's your rush?" Why kick someone out of their home immediately?  Seems like karma and maybe the Golden Rule deserve a little consideration here.

Well, the first part is what I'm currently planning to do if I get the property.

The "rush" of kicking someone out of their home is because the whole premise of financing would be as an owner-occupant so I can qualify for better interest rates, and can put less $ down on the property. So, if I purchase the property and the contract with the mortgage company says that I will be living there for at least a year, and I don't actually move in, then the lender can call the mortgage due because I've broken the contract. So, unless I have the mortgage balance sitting around liquid enough to pay that off, then the property would be foreclosed on.

Cwadda

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Re: House-hacking advice needed
« Reply #6 on: September 19, 2017, 01:51:13 PM »
All on month-to-month leases and you're entertaining the idea of evicting them? L0l, why? It's a hell of a lot more difficult to evict someone rather than giving written notice that you're ending the rental agreement. Also, if occupying the property is contingent on your loan, there's usually a large grace period after closing in which you actually move in. Mine was 60 days.
« Last Edit: September 19, 2017, 01:53:40 PM by Cwadda »

RethinkTheRatRace

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Re: House-hacking advice needed
« Reply #7 on: September 19, 2017, 02:42:44 PM »
All on month-to-month leases and you're entertaining the idea of evicting them? L0l, why? It's a hell of a lot more difficult to evict someone rather than giving written notice that you're ending the rental agreement. Also, if occupying the property is contingent on your loan, there's usually a large grace period after closing in which you actually move in. Mine was 60 days.

Sorry, I didn't realize there was a difference between evicting and ending the rental agreement. One sounds easier than the other one, but are they not fundamentally the same? I'm out of state temporarily, so I haven't had a chance to look at the property, and there are zero pictures of the interior of any of the units, so this may all be for naught because it could sell before I get a chance to look at it, or it could be terrible on the interior of all the units and I wouldn't want to bite off a rehab project of that magnitude.

Cwadda

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Re: House-hacking advice needed
« Reply #8 on: September 20, 2017, 08:21:56 AM »
All on month-to-month leases and you're entertaining the idea of evicting them? L0l, why? It's a hell of a lot more difficult to evict someone rather than giving written notice that you're ending the rental agreement. Also, if occupying the property is contingent on your loan, there's usually a large grace period after closing in which you actually move in. Mine was 60 days.

Sorry, I didn't realize there was a difference between evicting and ending the rental agreement. One sounds easier than the other one, but are they not fundamentally the same? I'm out of state temporarily, so I haven't had a chance to look at the property, and there are zero pictures of the interior of any of the units, so this may all be for naught because it could sell before I get a chance to look at it, or it could be terrible on the interior of all the units and I wouldn't want to bite off a rehab project of that magnitude.

There is a major difference.  An eviction is a legal thing, performed by a lawyer, and courts if needed.  When you evict someone, it's not a very pleasant process.  In many cases there is enmity, they could turn on you, and even start tearing up the place. 

Ending a rental agreement is giving notice (whatever the notice says in the lease, mine says 45 days) by EITHER party.  It would be best to approach the tenant and give them a heads up, and to try making their transition go as smooth as possible.  Be friendly and courteous.  This option is 100000000x easier than dealing with an eviction.

partgypsy

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Re: House-hacking advice needed
« Reply #9 on: September 20, 2017, 11:07:58 AM »
There is no reason to evict anyone if they are on month to month lease. just give them notice their lease is up an will not be renewed. And yes I would be very surprised if the stipulation for owner occupied would not have some kind of grace period, as in any situation, the person is moving from somewhere else and may need to sell house, relocate, etc.