You must be logged in to reply to this topic.
-
There is an estate being settled and I have an opportunity to bid on all or part of the real estate holdings. Man died without a will and his only kin (a daughter who does not live here) wants to liquidate everything and go on with her life. Everything includes 4 or 5 (one renter is trying to get a loan to purchase their rental) single family homes, 1 duplex and one city lot. All but one of the properties are brick construction and all are at least 50 years old (normal for this area). The duplex and 1 single family are empty. The others have renters, but information about them is scarce. The executor has been unable to obtain much information about the renters so that lease information is sketchy at best. The executor and the lawyer are confident that clear title will be passed to the new owner.
However, because information about the renters (duration of leases remaining, amount of rent, deposit etc.) leaves something to be desired. I am flying blind.
The houses are assessed from $70K (duplex), to $70.9 to $140K for the single family. I sense a possibility here, but the renter questions concern me. With the uncertainty for rentals going forward with Covid etc. I would want to fix and flip. Cash for keys is always an option, but at what price does that make sense?
Please share what you would be asking/looking for or if you would even bother.
Thanks in advance,
Gary SwartzI think I would start by going to talk to all the tenants and explain that you are a potential buyer of the property and wanted to see if they could tell you about the property and if they had a copy of their lease. I am not sure how far you would get with this, but it might yield some information you don’t currently have and help you figure out the risk that might be buried in this deal.
The next thing I would do is talk to the daughter and see if she would be interested in cash flow without property management. If so, this might be a deal where a master lease or a lease/option would be appropriate. This might get you into the properties without risk. You could take them over with the existing tenants and start sorting it out and decide where all the problems might be before committing to purchase.
Since you don’t know what the best price to offer is I think I might start with a master lease and move into the option idea when you have a better idea of what you are getting into.
Thank you Don,
I started to do that and was asked to stop via the executor. As ‘I said, concerning the existing renters and their agreements I’m flying blind which is why the thought of buying out the renters seems to make sense?! (if they even have agreements and if they are current. The one renter I spoke with has a 2016 agreement. BUT she has continued to send her $).
Do you have experience with “cash for keys” and if so, what value/amount did you use?
Gary Swartz
“If there is no God, nothing matters. If there is a God, nothing else matters!” H G Wells
I would be a little concerned that the executor doesn’t want you talking to the tenants. This seems like a perfectly valid action given that as you said you are flying blind. The fact that they don’t want you checking on this information is a bit of a red flag from my perspective. Maybe it is nothing more than they just don’t want the tenants knowing the properties are being sold. It could also mean there is something there they don’t want you to find.
I think I would talk to the executor a little more and see what their concern is with you talking to the tenants is and if they have another suggestion for how to get what is obviously necessary information to make a good deal.
I would definitely pursue the master lease. As one of my mentors said in a seminar, everybody wants cash. It is up to you to find out what they really need/want, i.e. what are they going to do with the money. I was on a call with Pete Fortunato a week ago where he mentioned this exact thing. He said contrary to popular belief nobody wants a pile of Federal Reserve notes. He said if they say they want that they are lying to you and to themselves. I found that comment enlightening, to say the least.
If the tenants are paying, you don’t want to kick them all out. Then you’d have a bunch of vacant houses.
Usually there is only an executor IF there is a will. I think you said there is no will.
If it were me, I’d ask “what’s the least you’d take for everything” then negotiate some more.
Then just get an OPTION on the whole package. (But you snooze, you lose -= better get it fast)
Ideally, you’ll sell off some of the properties so you could end up with a few of them FREE AND CLEAR to keep for yourself.
A Highest bidder Sale would work great for this!
.
I did a little digging to find this explanation about how a court designates an executor (sometimes by other names, depending on the state) when there is no will. Since the daughter is the only heir (and was apparently unable or uninterested to be an executor), the court had to go outside the family for an administrator.https://info.legalzoom.com/article/how-do-you-become-executor-estate-without-will
Can the current designated executor legally prohibit one from talking with the tenants? I doubt it, but it could make him/her angry for some reasons. I once had a realtor I had only talked with, but not contracted with, surprise my tenants and ran them off the property before I had even made a decision on selling the house.
It would be worthwhile BEFORE talking with those tenants to learn what protections the relevant state law provides for tenants with existing lease agreements. The tenants may well not know what those rules are. If you can provide some assurance that in case of a purchase (or master lease) that they won’t have to upset their life with an emergency move and likely could expect a lease renewal once the existing state law protection for such in-place leases expires, you’ll have a lot better chance at a functioning long term relationship with them.
–Dee G
.
These court rulings are at least a strong measure of the dissatisfaction over the federal CDC agency trying to regulate evictions:A nationwide ban on evictions is well outside the congressional power to regulate interstate commerce, ruled U.S. District Judge J. Campbell Barker on Thursday,
CHRISTIAN BRITSCHGI | 2.26.2021Federal Court Strikes Down CDC’s Controversial Eviction Ban as Unconstitutional
AND
Texas Supreme Court Ends Enforcement Of National Eviction Moratorium Statewide
Texas Supreme Court Ends Enforcement Of National Eviction Moratorium Statewide
They don’t however rule out further court fights over that issue — and many other housing-related issues where the blue states and red states have hard core disagreements.
–Dee G
I heard an attorney discussing these Federal Court rulings and his position was that if your rentals are in one of the areas where these courts have overturned the moratorium that you can evict if you need to. That the Federal appeals court ruling applies to the geographic areas they oversee. To get it overturned nationwide would require a ruling from the SCOTUS.
Since I am not an attorney I have no idea if what he said is a valid interpretation, but I would say it is worth at least looking into if the inability to evict is sinking you as a property owner and you need to take steps to fix the situation.
You must be logged in to reply to this topic.
