Power Tips For Wholesaling Houses With Tenants
Wholesaling houses with tenants? It can be a highly profitable niche. It can also be a pain, with issues that can hurt your reputation if your end buyers aren’t getting what they expected.
Here are some quick power tips that can help real estate wholesalers turn properties with trouble and non-performing tenants into big profit centers.
Be Careful with Upfront Inspections & Walkthroughs
Visiting and going through the property in advance of purchase can be quite stressful for tenants. Many are going to be scared as to their future housing. If they have already been butting heads with the current owner that can escalate quickly. You don’t want to get off on the wrong foot with the tenant or get into a legal situation.
Get Estoppel Letters
You can’t rely on what the seller says about the lease or status of the tenant. Your title company or closing attorney should obtain estoppel letters, and get the tenant’s side of the story as well.
Communication, Communication, Communication
When people are scared, feel threatened, or they feel their family and kids are under threat and are backed into a corner they can obviously act pretty emotionally. It’s often the uncertainty that gets them most worked up. Be communicative. Especially as you are closing on your purchase transaction. If possible, have your property manager reach out to the tenant in advance. Let them know their options. Tell them what’s going on. Keep them calm. It can make all the difference in the world.
Take Advantage of the Fresh Relationship
Landlord tenant relationships can go off the rails and sour fast. It can be really hard to salvage them at that point. A new owner entering the scene can make all the difference. Take advantage of that to its fullest. Listen and let them vent about the previous owner. Be on their team. Give them confidence in their situation and ability to stay if you’ll let them, or their ability to find somewhere new.
Find Ways to Add Value
This is one of those situations in which real estate investors can easily and quickly add a lot of value and equity to a property. With a new owner a non-performing tenant may be eager to work things out. If they start performing the property is worth more. If that tenant won’t work, have a list and real estate agents on call. Find the renter somewhere to go, and have qualified tenants lined up that you can move in right away. You may also add value simply by helping tenants exit. A cash for keys offer, notice of non-renewal, or notice to vacate, can all work. It can even all be done before you actually close.
Finally, make sure end buyers are totally clued in. Make sure they know what they are buying and getting with the tenant. This will preserve relationships, your reputation and repeat business. Put everything in writing.
