Securing properties with tenants is a situation full of intricacies.
In this short but sweet episode, Mr. TTP, Brent Daniels, gives a quick run-through on a master plan on negotiating and striking a deal with the residents.
- Determine monthly and long term lease tenants
- Offering “Cash for keys” agreement
- Escrow holdback to the purchased property
- Settling arrangements with the tenants
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So first of all, you have to find out is, the property on a longterm lease or is it month to month? Is it a longterm lease or month to month, if it’s month to month, then you can have a conversation with the tenants and put together a game plan for them to move out. It’s a lot easier to sell these properties if they’re vacant, especially if they need a lot of renovations. If they need a lot of renovations, you need the property vacant. You can’t just have family living in there and you’re ripping out the kitchen and everything. So you need to have the conversation with the tenants. You need to give them enough notice. You need to give them enough runway to be able to get out of the property.
Now, typically what happens there is you give them cash for keys. “Hey, listen, I want to help you in this process. I’m willing to give you $500, $1000.” I mean, I think I’ve given $5,000 before for cash for keys just so that they get out of the property and I can have access to that property or my buyers can have access to the property sooner. Now, if they have a longterm lease, again, you can offer cash for keys and see if they would get out. But if not, the Landlord Tenant Act protects that tenant. You can’t just evict a tenant if they are paying in a timely manner according to their rental agreements, they’re abiding by the rental agreement. You just can’t kick them out because you want to do something with the property. They have to be in there for the term of the lease. So when you’re talking to people that have tenants, you need to find out, are they on a longterm lease or a month to month? And that’ll help you really figure out the strategy.
Now, you can sell those deals with the tenants in and close on it as long as they have, it may be 30 days, to get out afterwards or whatever else. And in that situation you would do what’s called an escrow hold back, where the title company or closing attorney would hold on to $10,000 of the seller’s proceeds, the owner’s proceeds, and they get that released when the tenant leaves the property in a decent condition. So we do a lot of deals with tenants. I mean, the fact is, this is the craziest thing about real estate investing, craziest thing about real estate investing is 80% of the deals we do are from investors. What I mean by that is, they’re rental properties.
They’re retired landlords. They’ve depreciated the property as long as they have. They don’t want to deal with tenants anymore. They don’t have the budget to fix it up. People get so to be real estate investors without building that foundation of finding discounted properties, and all of a sudden this thing turns into a money pit for them, it turns into a huge frustration, and over years of being frustrated with not only having to be the concierge to your tenants to make sure that if a light bulb’s out that it’s not the electrical, it’s the light bulb, and that the reason that the toilet doesn’t work is because you need to plunge it. After years and years and years of dealing with that, people get tired of it. People get tired of it.
Most people are running these things themselves. It’s not going through a property management company because most of the time the cashflow is thin and it’s too thin to have a property management and so people get tired and they get done and they don’t raise rents because they make a little agreement with their tenants and they go, “Hey tenant, listen, you fix what’s going on. I don’t want to have to fix and upgrade this house, but I won’t increase your rent every year. Deal?” “Deal.” Okay, great, and then they stay there 20 years, the property, inevitably. All the natural forces in the world and the tenants beat up that property, and it needs to be bought cash because of the condition. And that’s where we come in.
If you’re interested in joining the most proactive group in real estate investing in is the TTP Program. Go to wholesalinginc.com/TTP. I personally mentor you. You get my cell phone. We text. We call. It’s crazy. It’s bananas, right? But it’s the truth because I want you to be as successful as possible and I want to work with you and I love you. So if you’re interested in that, wholesalinginc.com/TTP. Check it out. Scroll down. Keep scrolling. The little scroll thing is tiny because there’s so many testimonials. Nobody, nobody has more testimonials. Check it out. If it feels good in your gut, sign up for a call. Till next time, you’re the best. TTP.