Is it a bad idea to buy a property that is currently leased by tenant (Chicago: real estate)

[Fighting Fungus]

Interested in buying a property that has tenant living there, lease expires 4/30/2015. Is this a bad idea and are properties currently leased harder to sell?

[mr roboto]

Would you be buying it for a rental property or to live there yourself?

[nikitakolata]

In my experience, properties that have been leased show more wear than properties that have been owner occupied. I'd want a very thorough inspection. If there's nothing wrong with the house though, the fact that it had been leased alone would not stop me from buying it.

[Fighting Fungus]

Originally Posted by mr roboto

Would you be buying it for a rental property or to live there yourself?

I would live there myself.

[Anne C M]

Originally Posted by Fighting Fungus

Interested in buying a property that has tenant living there, lease expires 4/30/2015. Is this a bad idea and are properties currently leased harder to sell?

4/30 is not very far off. Do an early May closing and make it very clear during negotiation that you will not close with the tenant in place. You'll have a final walk-through after the tenant moves out so anything damaged in the process will be dealt with before closing.

It's better to avoid dealing with the tenant all together if possible.

[mr roboto]

Originally Posted by Anne C M

4/30 is not very far off. Do an early May closing and make it very clear during negotiation that you will not close with the tenant in place. You'll have a final walk-through after the tenant moves out so anything damaged in the process will be dealt with before closing.

It's better to avoid dealing with the tenant all together if possible.

Agreed here. Make current owner wrap up the lease and inspect after tenant is out.

[nikitakolata]

Originally Posted by Anne C M

4/30 is not very far off. Do an early May closing and make it very clear during negotiation that you will not close with the tenant in place. You'll have a final walk-through after the tenant moves out so anything damaged in the process will be dealt with before closing.

It's better to avoid dealing with the tenant all together if possible.

Yes, I definitely agree with all of this.

[BRU67]

I think it depends on the tenant. Ask the property owner for a rent payment history going back to the start of the lease, or at least one year. If the tenant has consistently paid rent on time, it shouldn't be much of a problem. In fact, you may even want to keep the tenant in the building. Good tenants are like gold, and it's sometimes a hassle to find tenants in some areas who both want the apartment and have good credit/employment histories.

If the tenant has not been paying rent on time, I wouldn't per se avoid the property given the lease is almost over but I'd be very careful. People who don't pay their rent on time usually have bad credit. People with bad credit often don't care about financial consequences of an eviction action, because they know they're not going to get a good landlord reference, their credit is already shot, and they have no assets you can grab when you get eventually get your judgment for unpaid rent.

Chicago and the Cook County courts are very tenant friendly and most deadbeat tenants know this. He can stop paying rent knowing it's going to take you about 2-3 months (plus about a grand or so in attorneys' fees and court costs) to get him out of there, and maybe longer if he wants to try to drag it out or you mess anything up, like the 5-day notice for example. Make sure you have the liquidity to cover that should it occur.

[Lookout Kid]

We tried to look at a house once where the tenant was not cooperating with real estate agents trying to show the home. I understand that it can be an annoyance for a tenant to have prospective buyers walking through your home, especially if you are not super excited about having to move out at the end of your lease term. But I believe the owners of this property were considering legal action against the tenant, since she was having a negative impact on their ability to sell the property (and thereby a negative effect on the ultimate value of the property).

We saw the red flags and moved on after failing to see the property twice with our agent.