What you should know about the law when buying foreclosed multi family homes that are currently occupied
Real estate is still a solid investment, despite the recent housing crisis. Purchasing a multi family home such as an apartment complex or duplex can provide income and equity. If you’re considering buying multi family foreclosed homes that are currently occupied, you will want to know the rules and procedures first.
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Research and inspect the property
Research and a professional inspection of any property you consider will prevent problems and unforeseen costs in the long run. Buying a foreclosed occupied multi family property that is not structurally sound or has a bug or rodent infestation will definitely require money to fix. Just because people are living there, doesn't mean the building does not have issues.
If you want to learn more about making a good investment on a foreclosure, this guide covers the ins and outs of shopping foreclosure listings and buying foreclosed homes.
In addition to knowing about the building's needed repairs, you’ll want to know if the building is occupied. If it is, you need to find out the status of tenants’ rent, leasing agreements and payment histories so you can decide if tenants can stay or need to be evicted. This may also hinge on needed repairs.
When you’re buying foreclosed multi family homes that are currently occupied, rules and procedures vary from state to state. Occupants have a period of time after a foreclosure to vacate the property. You may have to honor lease agreements if you buy the property. Also, if a former owner lived in the property, he or she may be disgruntled, refusing to leave and claiming squatter's rights.
Be prepared for legal issues
As the new owner, you may have the additional expense of eviction procedures. Additionally, there have been instances when an owner didn’t know the property was in foreclosure, repaid the mortgage in arrears and had the property returned. This can happen due to Right of Redemption rules or in a bankruptcy case.
Hiring a lawyer is a good preventative measure when you’re buying occupied multi family foreclosed properties. It helps to learn the state laws that will impact your real estate investment as well. These buildings can be a good investment, but you need to be prepared to take necessary steps - and have the money to take them.
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