Two Bad Tenants
Two Bad Tenants has been a guest on Collecting Keys, the real estate investing podcast hosted by Mike DeHaan, Dan Austin and Dylan Koch.
Why We Walked: A Seller-Financed Duplex With Two Bad Tenants
Dan Austin walks through a live seller-financed duplex negotiation in Washington State where a non-paying tenant and a sibling who believes he owns half the property turn an apparently decent deal into a liability. He breaks down the numbers, explains why a 15% discount doesn't cover the eviction and litigation risk, and describes pivoting to list the property instead of buying it.
Key takeaways
- Price in the seller's headaches: Dan argues this duplex needed roughly a 25% discount off after-restored value, not the 15% the seller wanted, because of eviction and litigation risk.
- The deal math: ~$350k restored value, $300k price with 10% down ($30k), ~$5k closing costs and ~$30k renovations — about $65k out of pocket before any eviction or cash-for-keys expense.
- A family member living in one unit who believes they're owed part of the property is a red flag; expect a fight, cash for keys, or a long eviction (up to six months in Washington).
- On seller-financed deals where the seller wants mailbox money, you usually can't refinance out quickly, so assume your cash stays parked in the deal unless you negotiate a short carry up front.