Investment Property Seller Antics
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Typically the purchase of an investment property is smooth. Sometimes title work complicates the process or the buyer’s financing falls through. Occasionally, you see a property seller start to do strange things.
My customer purchased a multi-unit property that had one vacant unit. As part of the purchase agreement, we require that we are able to show and lease the property prior to the closing. This helps us get a jump start on finding a new tenant.
The customer was at the property showing a unit and ran into one of the other existing tenants. She told him she was moving out at the end of the month because the existing owner was a crook [her words]. Seems she claims that he stopped by looking for not just this month’s rent, but next month’s rent also (when my customer would actually own the property). Luckily she was smart enough to realize that she had no reason to pay him next month’s rent early regardless of who owned the building. Needless to say, my customer was quite upset. A quick call to the listing agent put that problem to bed.
I recommend that when you buy a building that is currently rented, you as the buyer should go over to the property as soon as possible to introduce yourself and assure the tenants that you want them to stay. Talk to them about what they like and don’t like about their unit. Confirm that in fact there have not been any side deals made with the current owner.
This short 30 minute visit can help alleviate many silent deal killers prior to closing!
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Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Investment Property. He owns and manages almost 30 investment property units from single family to multi-family. Find his website at www.minnesotainvestmentrealestate.com or receive his blog via your RSS Feed or in your Email.
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If I was the seller I would not want the new buyer bushing around the property until it was his/hers. What if the buyer starts talking to the tenants, introducing them selves then does not buy the property for some reason, maybe even, out of his/her control. Now what?
In Arizona, at least, many tenants get nervous when buildings are sold. They think the new owner will raise rents, be a bad manager and so on: sometimes they move out and give notice because the property is being sold. In most cases I noticed, it’s better to keep quiet as long as possible, but of course everyone finds out during the due diligence period, so I do see some need for contact with the tenants as a buyer but not as a seller.
Thanks for this post Scott. Stopping over to introduce yourself to the tenants can go a very far way indeed. Great info!