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Learning and Burning

Marijuana Sandwich

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I have this Sandwich deal that came due in June 2014. Seller went to the property in July and found tenants growing pot. I did an inspection in August to confirm and it is true. Tenant who's contract expired in June is growing pot. Based on what i see he has permits and looks like a professional set up. Owner wants me to evict as she is not a fan. She called the police and was told he is legit and is not in violation so they are not interested. So now leads me to my questions. Am i in a situation where i have to evict? My contract expires in another year and a half. Tenants pay on time all the time and take great care of the property. Owner does not know of the expired due date of tenant but is on my ass to tell her when the lease is up? She is an old lady who has nothing to do but stress even though i have never missed a payment and since the start has put approximately 50k in her pocket.

 

Never ending but im OK with it...

Learning and burning... The midnight oil only.....

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I'm no lawyer, but there needs to be a reason to evict, some violation of the lease agreement at least. Has there been any? Has there been one? If not, I don't see how you can evict your tenants. Likewise, you are the homeowner's tenant and unless you have violated the terms of your agreement with her, she cannot evict you.

Curious, how did she become aware of the marijuana business in the house?

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There has been no breech of contract on my end or the tenant's end. So, no reason for eviction. Owner is an old lady who lived in the property for 30 years before her husband passed. She showed up at the property without notice and walked around the property demanding to see in the garage etc. The neighbors she says tipped her off to the growing. So now do i need tell her about the expired contract? She feels i should evict them for expired contract, I do not want to tell her they came due in June.... Now i feel also i could raise the rents due to expired lease now becoming a month to month and they are running a business out of the property. Owner is wanting answers and i'v got to address her sooner then later, How would you go about dealing with nosy old owner?

 

Rotten Owner's anyway....

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I see a couple of things you can do. If the t/b's lease has expired you can give notice to the t/b to move and place another tenant/buyer. Or, you can explain that due to the new pot laws (I assume) there is nothing you can do to legally evict regarding the plant growing. Put it on the seller and let her know you cannot pay her the rent when the house goes vacant until you can place another t/b.

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The tenant/buyer contract with YOU has expired and so it defaults to a month to month lease, subject to your accepting rent each month. However, YOUR lease with the homeowner has not expired and so nothing in this deal changes between you and the homeowner. By the way, she doesn't have any legal right to snoop around the property, knock on the door, peer into windows, etc. Most every state I know requires at least a 24 hour notice to the tenant from the homeowner to pay a visit, unless there is an emergency or extenuating circumstances.

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I talked to the seller and as expected she is full of stress and is being the P.I.T.A (pain in the ass) that i know her to be. I told her that my and her agreement has not changed and i have no real reason to evict as the house and all are in good shape. She then lets it rest. So now that i am in a month to month and there is a business being ran out of the house, what are your thought on raising the rents? I feel with a business there is good reason for raising the rents as long a i am in the right to do so? Also, can i now give 30 days notice to vacate if i choose to do so if tenant does not coincide with a rent raise.

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Being that the lease between yourself and the t/b is over, you default into a month to month agreement. Either party has the right to terminate the agreement by giving 30 days notice, ,(or more or less, if the state statute says otherwise. But most states I am familiar with require 30 days).

And I agree about the rent. Raising it doesn't seem like a bad idea. The tenants are running a business and making what I assume is good money, a bump up in the rent shouldn't send them running. It would be a lot more costly for them to shut down and relocate elsewhere.

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I have the terms between seller and myself under wraps for now. So the question is how would i go about informing tenant about rent raise? I am looking at a $200 raise as with the amenities on the property that obviously fit tenants needs and with the raise property is where market rents would be. What are your thoughts on this part of it?

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Question I should have asked previously: are these tenant/buyers, or simply tenants?

Either way, if their contract with you has expired, call and ask what their plans on now that there is no longer a binding lease agreement. If they want to stay, advise them of the increased rent and gauge their reaction. Perhaps they're OK with it, (business is booming), perhaps they want to negotiate, (be flexible and keep them if they are good tenants), or perhaps they decide to give you their 30 notice to vacate, (rethink the rent raise or begin your marketing plan for new tenants). If they end up staying, draw up a new agreement reflecting the new terms and you are done.

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The tenant started as a t/b and since the contract has expired is now a tenant. That is the perfect way to work this one out. I feel they will see value in buying the property as it obviously fits there needs. And if not i got time to re market and do it again. Good stuff and am excited to put it in play.

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You're negotiating from a position of strength. The t/b allowed their lease to expire, so their option has expired, as well. Do what you think is in your best interest, but if they are good tenants, don't be too quick to push them out the door. Making payments on a vacant property is not what our business is built around. B)

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Ok, I have contacted the tenants in this one and comes to find out the dad is who my agreement is with is in the hospital recovering from a surgery. The son is the one living there with his wife and kids helping dad and tending the business. Son say's he does not want to be in any agreement to buy but will be happy to pay the raised rents. And he is not sure where his dad stands on renewing a lease with option to buy so a month to month is all he is willing to commit to till he talks to his dad. Well, that would work seeings they pay on time and are willing to pay more. My scenario with seller will expire in sixteen months and so not sure the best way to proceed with the current circumstances on this sandwich..... I feel the property as a l/o could produce more revenue/option money as apposed to month to month then giving seller property back since current tenants do not want to buy. Dmmned if i do and dammned if i don't..........

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No downside that I can see. The tenant has agreed to the increased rent and they pay on time. When dad gets out of the hospital, have a talk with him and find out his plans. If he doesn't want to commit to a lease purchase, then sit and figure your options. Is a straight purchase a good deal for you? If so, get your financing in place and do it. If not, you can continue to milk the property for cash flow. Or, you can always try and assign your position, (a good one from what I know), take the assignment fee and move on.

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Update on this one.

Marijuana tenant gave me his notice in December and moved out Jan 1st. So he made the decision for me. I got the property back with trash and the usual low budget i'm gonna take my ball and go home now cause you made me uncomfortable telling me i'm running a business. Got back on Dec 28th cleaned washed and re rinsed on Jan 26th with a solid tenant who is paying $200 more per month and love love the property. I was stressed for a minute as an empty house is not good and my marketing was a bit slow. Christmas for sure played a part but with diligent hard work this one is back on auto pilot again.

This business is all its cracked up to be and i love love it. Smoke break HaHa.......

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