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Mentor
I saw SF, California and immediately started sweating.
Mentor
Laws in California are very tenant friendly, and it’s unlikely to end well. If you’re paying $370k below market value, maybe you can offer them the cash equivalent of 6 months of rent to GTFO. They call this “cash for keys”. But the eviction process won’t go well.
My first home was two family, each with 3 bedrooms. All but one of the tenants had month to month leases in the unit that we were going to use as owner occupant. He refused to be bought out, but we moved in and he became our six month roommate until his lease was up. As owner occupants we had a bit more rights, and he was decent (a little weird) but his rent helped pay for storm windows. If you really like the place investigate all options and laws.
What should be my next steps? Should I let this deal pass?
More details: SF city, unit is in decent shape, one tenant (lived there 10+ years, qualifies as having a disability). Comparable units around it with similar build are going for 850K plus. Any advice on how to tackle this would be appreciated. I don’t mind paying all the extra fees for relocation/legal fees given the property value is much higher and the current landlord simply does not have the right to relocate tenant because she own multiple properties and doesn’t want to live in the unit.
I would be hesitant to do this in California. I would consult with a local eviction attorney prior to purchasing so you understand what you can expect and how long the eviction process can drag on for. I have clients in Multifamily real estate and in some tenant friendly markets it can take years to get a tenant evicted and during this time they are not paying rent and are destroying the place so be very careful.
If the numbers are right maybe you just turn this into an investment property and let them keep renting, could give you the funds to in turn put you in your own nicer rental.
Ideally would want to move in. My mortgage would be ~2,500/month including taxes, insurance and interest.
Renter is only bringing in $1,180/month