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kp2171 · Mar 13, 2007, 01:26 PM

I'm considering buying a duplex in Iowa that currently has tenants that are both just into year leases... 9 mo left and 11 mo left.

I'm looking for a property for my mother and her sister to live. This one would meet their needs, but needs some TLC.

1) Am I correct in understanding that upon the acquisition of the duplex I would need to let the current tenants run out their leases? Is it common to buy out the lease if the tenant agrees? Any way to tie this to the sale... as in legally I buy with the tenants agreeing to opt out for some financial payment? One just moved in, so I'm thinking he won't care to opt out anyway. Mostly just trying to understand options.

2) Assuming that I do buy and need to ride out the leases, can I then simply not offer to lease to them once the lease expires? What kind of notice is needed? Can I switch to a month-to-month lease at that time? I want to be fair and also understand my options.

I've trying to work my way though the sticky notes in the forum... but I just came across this property unexpectedly and I know it's a good buy whether I rent generally or to my mother based on number crunching. It's the legal side I'm weak on, and I haven't seen anything concerning transfers with sale of the property, though I've always thought the new owner needed to honor any leases.

3) Last question, I know there are decent resources online. Any fav books recommended for someone looking to get into rental properties concerning the tenant/landlord regulations? I don't need financial or buying info... I'm pretty comfortable crunching numbers. I know rules are region specific, but any books you'd have in your office?

I've picked up some at the library that have been useful. Just interested in people's favs if any.

Thanks!

Fr_Chuck · Mar 13, 2007, 01:42 PM

You are obligated to honor the leases they have in place.

And until you actually buy the properties, you have no legal standing to get into a contract with one of the tennants to buy out their lease. Since you don't own their lease. You can see, if the current owner agrees to let you, you can ask them if they would be interested in it, and come to some non binding agreement, but you are buying it, knowing you may have to let them live their lease out.

landlord advocate · Mar 14, 2007, 03:31 PM

Be very careful when getting the books from the library or buying them. You must find books that are specific to your state. Over and over again people write their leases based on something they read in a book. Later they find out that the revised code for their particular state does not follow their lease. The judges have the right to nullify all or portions of the lease agreement if it does not follow the code. Think about joining a landlord association in your area. They often provide sample leases and applications specific to their area. Most also have small libraries open to their members.

You will inherit the lease agreements upon ownership of the property. You must honor the lease, including the amount of rent and notices.

kp2171 · Mar 14, 2007, 03:58 PM

Thanks again for the info.

We're getting ready to join a local association. And we have a good friend who has invested in rentals for several years and managed them... so she's usually the person I go to for questions, but she's out of the country for a spell and I needed to know I was thinking correctly in case we decided to move on the rental.

More number crunching last night made me think twice about this property. Just too many years of delayed improvements and upkeep and too low rents to match will make it negative cashflow for at least a year or two. Oh well. Bring on the next hundred properties.

Thanks again.

Fr_Chuck · Mar 14, 2007, 07:19 PM

You may have a detailed house inspection, normally after the inspection there is a demand to lower price to cover the needed repairs.

Normally I look at property, get a good home inspection, ge est for that repair, take est value of property at full fixed value, take off the cost of the repair, and then take off at least another 20 percent for my profit factor to make an offer on property.

It just means you will need to offer lower price and see if they will acept or not, ( if it is something you want, and depending on how bad they need out of it.

kp2171 · Mar 14, 2007, 07:58 PM

Well... the problem with this one is that the rents are too low... and I honestly need to do more due diligence to see if they could be raised in this area.

The owner has, in my opinion, done NO maintenance since purchase a dozen years ago... and at this point, even if it was GIVEN to me, I couldn't turn a positive cashflow for at least 2 years.

Is a good sweat equity home fro resale maybe, but crappy cashflow home. And I didn't really see that until after I had some numbers that were missing.