Inheriting bad tenants?

Category: Miscellaneous

1 replies

Original post

We recently looked at a 4-unit we were pretty interested in. We asked the seller for a P&L, but he wasn't able to provide one. He told us how much he charged in rent, but we were worried that he might have been having trouble collecting from one or more of the apartments. We put in an offer, but included that the tenants would need to be removed by the time of sale or else proof of rental collection needed to be supplied. He ended up accepting an offer from someone else (who clearly didn't include a clause like that). I'm curious if anyone has had success including that or something similar in an offer? I don't want to displace anyone, but I also don't want to inherit a tenant that isn't paying their rent.

Reply by Tommy Parker

A common middle ground I’ve seen work better than requiring vacant units is asking for proof of payment during due diligence rather than making vacancy a condition of sale. That way, you’re not forcing displacement, but you’re also not blindly inheriting risk.