# keep tenants after buying a duplex?



## digitalatlas (Jun 6, 2015)

Hi,

Anyone have experience with keeping the existing tenants after buying a duplex? Still in the research phase, but is this a good idea? I've read on posts here that it's not a great idea to keep tenants. If the place was renting well, why would someone want to sell it?

I've posed that same question to some realtors and property managers. People may sell for different reasons, and I was told that it's actually a good idea to sell when the place is fully rented in order to demonstrate the maximum income potential for the place.

I'm still skeptical about assuming existing tenants (not that you can just kick them out anyway), but is there a legitimate case in which buying a duplex that is fully rented is not a terrible idea?

Are there ways to protect oneself, or at least get informed? Maybe try to get as much info about the existing owners and tenants as possible from the selling agent?...They won't say anything bad, but maybe they'll slip up? 

Thanks


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## Mortgage u/w (Feb 6, 2014)

Tenants are tenants. Whose to say the ones you put in are any better than the existing ones?

When I bought my rental property, I was lucky enough to have empty units and I only assumed 1 tenant. His rent was $315. He fortunately wanted to leave before the end of his contract which I gladly accepted. Unit is currently rented at $700.

Had the units been all rented at the current market price, then I would have no issues assuming them all. I am not looking to make friends with my tenants - I'm looking to make money. 

Assuming tenants is not a bad idea but their rents need to be at par with the market. I would be more hesitant assuming when rents are low. Although the agent will tell you that the rent increase potential is huge (selling pitch), I find those are the tenants that never leave. Why would they when rent is so much higher elsewhere? You are then stuck with low rental income - which may be a reason the property was for sale in the first place.


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## Just a Guy (Mar 27, 2012)

Depends on the province. Some provinces are more tenant friendly than others. Most of the time I'd prefer to get the place empty and make it a clause in the purchase, however there are times when I kept the tenant and been happy. When I looked at the place, and talked to them, I did a bit of a screening...if they kept the place well, were long term, and could fit my rents I have kept them on occasion. 

For most of my places, I prefer them empty so I can renovate and increase their worth before appraisal, but I've still got tenants in a few of my places that came with the property...years later, so they were a good deal.


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## digitalatlas (Jun 6, 2015)

Thanks that's a good tip about making sure the rent is on par with the neighbourhood.

Have you shied away from older buildings, like..over 50 years to maybe 100 years? I'm looking at something now and it seems the wiring, plumbing roof, furnace , and wall and attic insulation have been replaced in the last few years, plus renovated baths, kitchens, windows, and 2 units rented out. But the building is older and i don't know about the exterior brick, there's some staining. I haven't seen it in person yet. But does the age of the building cause worry?


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## Just a Guy (Mar 27, 2012)

Depends on your experience and the level of care taken with the property. While I prefer newer buildings, I've got some that are older. My first house was 75 years old and I still miss the quality of the construction, it will probably outlast anything built today. 

If you're looking for a place that's finished and ready to go, I doubt the cash flow will be there to support it. If it's nice and ready to go, it should command a premium in this market. Better to look for something structurally sound, with good wiring and such, but cosmetically ugly. Patching walls, replacing carpets, and painting can significantly upgrade a property for low cost, especially for a rental, and save you tens of thousands on the purchase price.


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## Mortgage u/w (Feb 6, 2014)

I prefer buildings built no earlier than the 1950's. The construction practices of that era were very different than today's. Maintenance and repair can become complex especially if no renos were performed or if any renos were poorly executed.
There is also a big mix of different construction practices back then. You could still find knob and tube, field-stone, lead pipes, etc. These can be difficult and costly to repair.


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## OhGreatGuru (May 24, 2009)

Check the regulations in your province. You may find you can't evict existing tenants without cause.


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## Rusty O'Toole (Feb 1, 2012)

I always keep the tenants. First you have to be sure they are worth keeping, before you buy the property. If they are paying below market rent or are dirty or have damaged their apartment you will know after you have seen the financials and inspected the building. Bad tenants are a good reason to not buy, or to get a suitable discount on the price.

You can't arbitrarily evict in Ontario. You can evict tenants in 60 days if you need the unit for yourself or a family member. Or 90 days for other reasons, as to do needed repairs or renovation. But if you do that, the old tenant gets first refusal when the renovations are done.

I have turned down deals because of long time tenants who were getting below market rent. But I would buy a place with a problem tenant, if the price was right, knowing I could evict for non payment or other reason, and willing to accept the hassle if I was paid.


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## Berubeland (Sep 6, 2009)

Unless you can figure out the reason for the sale, like it's an estate for example, don't keep the tenants. It's a duplex, the current owner files for vacant possession with 60 day closing based on your need to occupy the unit. You will never have this opportunity again. 

Landlords don't generally sell properties with good tenants in them. They don't, why would they. 75% of the time, it's shitty tenants.


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## sags (May 15, 2010)

As a former renter for 5 years, and then a homeowner for 25 years and now a renter again for 10 years, I wonder sometimes about these threads where people talk of market rent, but rarely discuss the actual units.

I have always found there is a wide range in rental prices, and it is almost always for good reasons. An older unit on a busy street in a bad neighborhood, is not going to get an average market rent from a "good" tenant most of the time.

"Good" tenants, who care for the property as if it was their own, pay the rent promptly every month, and keep the landlord advised of any ongoing maintenance issues.........are also smart enough to shop around. Tenants willing to pay high rates of rent for a less than average unit are possibly in a desperate situation and willing to agree to anything initially.

We have rented our unit for 10 years. The rent is a fair price...........fairly low compared to new construction units, but it is also older inside. Although in a great sought after area, mature and well kept..........the unit was built in the 1960s and much of the interior remains the same as it was back then. As tenants, we came to an understanding with the landlord that we will pay for upgrades ourselves, and every few years we complete another project...........and they will keep the rents where they are. After 10 years we finally have the place upgraded mostly to our satisfaction.........still some interior doors, molding and bathrooms to change in the future.

Just saying, sometimes I wonder about threads where people acquire a property and give no description of either the property or the area, and then ask about raising the rent (not talking about the OP here). 

Others rush in to say.....kick them out, splash a coat of paint on it, rent it our for "market rents"....... whatever they perceive that to be.

The market rent might well be exactly what tenants are paying and sprucing the place up a little isn't going to make that much of a difference.

We can stay in an older townhouse and pay $1000 a month, or we can move to a "luxury" unit in a new complex and pay $1600 a month.

What isn't going to happen, regardless of who owns these units today or in the future is we won't be paying $1600 a month to live here, regardless of how much a new owner paid for the unit or how much paint they splash around.


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## carverman (Nov 8, 2010)

Mortgage u/w said:


> I prefer buildings built no earlier than the 1950's. The construction practices of that era were very different than today's. Maintenance and repair can become complex especially if no renos were performed or if any renos were poorly executed.
> There is also a big mix of different construction practices back then. You could still find knob and tube, field-stone, lead pipes, etc. These can be difficult and costly to repair.


My mother's place in East Toronto is pre 1950. Brick with virtually no insulation between the brick and inside lath wall. 
Lath walls are very tedious and dusty to renovate, as you have to remove the entire walls right to the brick, then insulate with styrofoam before putting up drywall. 

The wiring was knob and tube, although some of the electrical wiring...(standpipe, fuse panel to breaker panel conversion, and some wiring was converted back in the early 70s, there still is quite a bit to do.

The water pressure was virtually non existent, only a trickle of water was available. All the plumbing right to the street water main had to be replaced with copper at a significant cost a few years back.
The big issue still remains is the old sewer pipes..cast iron inside the house and I believe clay outside to the main sewer. 

That is a major expense coming up for my brother who plans to continue living there. because old as it is , it is STILL the only house on the small street with a private driveway, a garage, and a decent back yard and a block away from the Bloor-Danforth subway line. As they say "Location-Location-Location" is everything.

A similar age and construction house next door was bought for around $250k a few years ago, rented out for a while, then sold. The new owner completely gutted the inside and renovated. That house sold for $800K recently. 

Back in 1972 when I first bought my mother's house, we paid $25K for it..now in todays market,,it is valued between $500-600K... and that is only because it still needs a lot of renovation. Kitchen, bathrooms and replace any existing knob and tube as well as needed upgrade of sewer piping. (Estimate about 40-$50K to complete renovations but that is very conservative..
it probably will cost a lot more.
Add a laundry pair plumbing and wiring and you got a decent $650k+house these days, very close to subway and shopping
and you can leave your car parked in the driveway while taking the subway to work.


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