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Its good leverage for you to try to renegotiate, no leases is not the end of the world, a lot of times they will all be willing to sign, if not, you said you can get higher rents.
Without leases it may be difficult to remove the tenants as courts today are very pro tenant should you want to get a higher rent base
tenants without leases are considered month to month and can be evicted for non payment or other legal and viable reasons. i would be more concerned that they pay their rent and he should be able to show bank records to confirm such. this also gives you the opportunity to have new leases signed with rent increases included if needed. he may also be collecting the rent in cash and is not reporting it, hence no schedule...also is it a legal 8 unit building? time to get an attorney?
I would agree wholeheartedly with the previous response suggesting that verification that the rent is actually paid to the owner. I've seen the situation where a seller gets family members/friends sign leases in order to make the building appear 100% occupied and raise the cap rate, when in actuality the building was less than 50% occupied and very unprofitable. I would be very wary if the seller cannot produce copies of checks actually received.
Yes, renegotiate or back out of the deal entirely. I would not touch the deal unless he (seller) can provide some type of proof of rent receipts/deposits.
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