What to Do When a Home for Sale has Renters Living There
Some of the best deals in Los Angeles real estate are lofts, condos and houses already occupied with tenants in possession. #tenantinplace #investment
These can sometimes offer bargain prices similar to distressed properties or fixers because properties with renters living there can bring down the final sale amount. More than 90% of home buyers are looking to move in soon, so renters in place may look too lived-in, and may not seem appealing to the majority of home buyers — But… Money-savvy buyers should remember that cluttered, unattractive properties in valuable neighborhoods generally present the best return on investment if they can be easily remedied. The right offer can be the instant remedy. Investors, flippers and advanced real estate buyers know that good results are possible by negotiating and doing due diligence. This article will explain how to make tenant-in-place work wonderfully for most any kind of home buyer.
When renters are living there, the prospective buyer usually needs to ask the seller a question about when the tenants will be gone. If the tenants are on a lease agreement, then the buyer needs to know when that lease ends. If the renters are on a month-to-month rental agreement, and they will still be in place at close of escrow, then the buyer must find out as much about the renters as possible. How much rent are they paying; how much is it worth to rent; what are the terms; are they good tenants; do they pay rent on time?
An estoppel agreement is often required to make sure that the tenant and new owner are on the same page. If the tenants will still be living there after close of escrow, then the buyer should send a questionnaire to the tenants asking ages of residents (when was the last rent increase, how much was the increase, what are vehicle license plate numbers?; is there any water filled furniture or pets? are there any new residents not on the original lease contract? Are all safety features still in place and functioning? Has the tenant requested any repairs that have not been performed?.
If the buyer wants to move in soon, then the buyer must either determine if they can hold out for 1-5 months in order to terminate the rental. Or…
The smartest action that buyers and seller may overlook is for the buyer to place an offer contingent on the tenants being gone by close of escrow. That offer encourages the existing owner to take care of the issue early so that the buyer may the right home for the right price, and move in quickly.
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.