Q: We’re bearing in mind purchasing a tenant-occupied condo in a condominium. The tenant has lived there since August 2019, and the market-rate hire will expire in 4 months. The vendor’s agent stated they may ship the condo vacant, however that we’d have extra leverage at the sale value if we stored the tenant. We visited the condo and the tenant has stored the entirety blank and in just right form. We’re no longer in a hurry to occupy the condo and it could be great to have some source of revenue for the time being. What are the pitfalls we will have to take note of earlier than we make this choice?
A: If you wish to use the condo as an funding assets, having a competent tenant saves you the time, pressure and value of attempting to find a brand new one. It additionally supplies the prevailing tenant with continuity — they don’t have to transport for those who’re making plans to hire the condo anyway. However if you wish to reside within the condo, and notice the tenant as a temporary strategy to save on some in advance prices, you will have to weigh the hazards towards the advantages.
“It’s all a question of possibility tolerance and the way badly you need the gap 4 months from now,” Lucas A. Ferrara, a Long island lawyer who makes a speciality of landlord-tenant regulation.
Underneath New York State regulation, a tenant who has lived in an condo for 2 years or longer will have to be given 90 days’ realize if the hire might not be renewed. So, there’s a clock ticking — the present proprietor will have to set that procedure in movement moderately quickly, if you need the condo delivered vacant when the hire expires.
The tenant might quietly move on the finish of the time period. However the condominium marketplace is aggressive presently, with emerging rents and occasional stock. The tenant may just, theoretically, contest the hire termination and refuse to depart. Worst case situation: You find yourself in a chronic eviction case that drags out for months and prices you a substantial amount of cash and pressure.
“A foul landlord-tenant case can run within the tens of 1000’s of bucks,” Mr. Ferrara stated, and remaining a yr. “It may be slightly pricey.”
Do the mathematics. How a lot of a bargain at the sale value do you get for a tenant-occupied condo? How a lot will the condominium source of revenue for the ones first few months offset your different prices? Is the margin huge sufficient to justify the chance will have to your courting with the tenant bitter? You will have to additionally believe whether or not you need to be a landlord, even for a couple of months, and be the individual to finish any person’s hire.
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