Q: We’re taking into account purchasing a tenant-occupied condominium in a apartment. The tenant has lived there since August 2019, and the market-rate rent will expire in 4 months. The vendor’s agent mentioned they may ship the condominium vacant, however that we’d have extra leverage at the sale value if we saved the tenant. We visited the condominium and the tenant has saved the whole lot blank and in excellent form. We’re now not in a hurry to occupy the condominium and it will be great to have some source of revenue for the time being. What are the pitfalls we will have to take note of sooner than we make this resolution?
A: If you wish to use the condominium as an funding belongings, having a competent tenant saves you the time, rigidity and value of looking for a brand new one. It additionally supplies the prevailing tenant with continuity — they don’t have to transport in case you’re making plans to hire the condominium anyway. However if you wish to are living within the condominium, and spot the tenant as a non permanent solution to save on some in advance prices, you will have to weigh the hazards in opposition to the advantages.
“It’s all a question of chance tolerance and the way badly you need the gap 4 months from now,” Lucas A. Ferrara, a New york lawyer who focuses on landlord-tenant legislation.
Below New York State legislation, a tenant who has lived in an condominium for 2 years or longer should be given 90 days’ realize if the rent might not be renewed. So, there’s a clock ticking — the present proprietor should set that procedure in movement quite quickly, if you need the condominium delivered vacant when the rent expires.
The tenant might quietly cross on the finish of the time period. However the condominium marketplace is aggressive at this time, with emerging rents and occasional stock. The tenant may, theoretically, contest the rent termination and refuse to depart. Worst case state of affairs: You find yourself in a prolonged eviction case that drags out for months and prices you a substantial sum of money and rigidity.
“A nasty landlord-tenant case can run within the tens of 1000’s of greenbacks,” Mr. Ferrara mentioned, and ultimate a yr. “It may be rather expensive.”
Do the mathematics. How a lot of a cut price at the sale value do you get for a tenant-occupied condominium? How a lot will the condominium source of revenue for the ones first few months offset your different prices? Is the margin large sufficient to justify the danger will have to your dating with the tenant bitter? You will have to additionally imagine whether or not you need to be a landlord, even for a couple of months, and be the individual to finish any individual’s rent.
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