Subject To/Eviction
A lady contacted me yesterday about a house she wants to give away. It's a nice house in a not so nice part of town. Worth 53k and she owes 30k. The tenants need to be evicted. Should I have the owner give me the house before or after the dead beats are thrown out? Obviously the payments have to be made while the eviction process is on going. I would like to take control of the house when it's vacant. Is that asking too much?
Thanks!
Arb
How long is the eviction process in your state? How much are you paying for the house? What are your prospects of getting good tenants in a "not so nice part of town"?
I would negotiate the price down some more (even below 30K) if I was going to make her problem become my problem. Or have her make the mortgage payments for 2 months. Use the situation to your advantage (but don't take advantage) with the seller, and then go start the eviction yourself the same day you record the deed. She may not have the heart to evict anyone, so go be the hero.
Personally, I would have her evict, as I wouldn't buy a house that's got deadbeat tenants in it, as life's too short to voluntarily deal with that situation. And, if you acquire the house with the deadbeats in there, and they WON'T move, you're responsible for the payments till you can get them out, but if SHE evicts, she's responsible for it till they're out, and you'll just be responsible for them till you can get a renter in there.
Keep in mind also, if there's deadbeats in there, no matter who evicts, if you intend to keep it to rent it out, there's gonna be a whole lot of repairs needed, so add those costs to the price of the house.
All true. But...
Let us assume that this really is a 60% LTV deal. Then you have to assume that the lady, knowing that she's giving away 20 grand, wants to do it quickly. If you don't take the house now then the odds of somebody else being willing to do this deal and evict the tenants are pretty good. I'd at least consider going ahead at this time and taking the eviction risk.
I spoke to another investor today and he said this is the kind of deal he runs from. He also said I cannot start the eviction process without an attorney because I am not the owner yet.
adverse conditions like this can be a favorable condition for high profit margin. i would look at the deal closely and not let "dead beat" renters keep me from a great deal.....kenmax
CommercialKing has a point so I want it really clear.
The deal as presented seems very attractive. Assume there is no nightmare waiting to happen, I and other investors would jump on the opportunity and agree to deal with the eviction process. The lady wants her problem to go away and she is will to give up a lot of equity. She could hire an attorney for a lot less. Be careful about walking from what might be a golden opportunity.
1. Be open to taking on the problem and then talk to her. Collect the facts. Is there a signed lease and other documents supporting her position?
2. Check the state rules. In Oregon and other states there are ways to correctly serve notice for a termination without cause. Month to month rental agreements (either on paper of by practice) fall under the idea of termination without cause.
Once you know the facts figure out how long the process should take - best case and worst case. Then figure out what they will cost. Maybe you can get the lady to pay for the time period when you are not collecting rent. Be creative but remember she is already offering a large discount if you make her problem go away.
Consider paying the tenant to move.
In all cases stay within the law and respect the rights of the tenant. There may be reasons why they have not paid. You do not want to be sued, you just want the place vacated. Actually you want a profitable solution so in the extreme it could mean the tenant wants to buy the place from you if you make a good offer. I am assuming in this case that the tenant is not a deadbeat but someone who was not treated fairly by the present landlady. Not normally the case but you actually do not know until you dig a little.
In case you are wondering, I have done a number of evictions. Never where I picked up a deadbeat tenant when I bought. The eviction process in some states is fair and not bias towards the tenant so if you have a reasonable process be willing to do a little work if it means a good deal.
John
[addsig]
Having had a deadbeat tenant I would consider paying the deadbeat to move out. Our rental property was in Utah. It took about 60 days to evict the tenant. i.e.pay a police man to assit us in putting her stuff on the curb. Not only did we not get rent for four months ($2000) but we ended up spending about $500 in repairs. I believe a tenant would be willing to move if you gave them $200-$500. Additionally you would have less damages (hopefully)