Does professional property management carry over with purchase?

Question

Hello BP family, I hope you are all doing amazing! I'm in the process of closing my first duplex rental property and I couldn't be more excited.

The current owner uses a professional property manager which I don't want to use. I was wondering if I have to take certain steps to terminate the property management agreement before closing. I plan on sending them an email with my intentions but I'm not sure if I have to do anything else - I don't want to get stuck with additional costs and fees.

Additionally, the current tenant's lease ends in late April and I plan to increase rent, as it is way below market rent. I was going to give the tenant the option of staying for a slight discount compared to the identical neighboring unit. Is there anything I should be wary about? Any cautionary measures I should take?

Any advice is greatly appreciated, and I'd love to connect!

Drew Sygit · Answer

Typically management contracts termiante with a sale of the building. Confirm in writing with current PMC.

Make sure you get all tenant/lease info by closing.

Jason Kern · Answer

Candidly, I don't know because I *always* use a PM. Typically, my PM will gather all the tenant contact info and go make arrangements, etc. Contact info, hours of operation, emergency numbers, lease updates... I think if I were going self manage I'd work up a one-pager of guidelines with my best guesses. I'm likely not the best source for you because I'm sure I wouldn't be a very good property manager. :>

I'm curious to see how the folks respond who DO self manage?!?!

Marcos Carbi · Answer

Great, thank you @Jason Kern! I'll definitely do that. Do you have a set time period where your tenants can call you? Do you recommend any important tenant responsibilities I should convey? I appreciate it!

Jason Kern · Answer

Have the seller let the PM know you won’t be using them. It’s not your relationship. However they may have some connections with service providers that know the building so get the PM’s contact and stay friendly if possible. Also, set expectations early with the new tenants. Inherited tenants can be a challenge as you didn’t vet and place them. Their expectations are important for more than just rent increases. Maintenance calls, response times and general tenant responsibilities should be part of early conversations. Also, if you do decide to use a PM at a later time they may be a great resource. It is all about relationships.

Marcos Carbi · Answer

Thank you very much! @Drew Sygit@Cameron Tope

Cameron Tope · Answer

Hey Marcos,

As @Drew Sygit mentioned, most PM agreements terminate upon sale.

If the current tenant is a good tenant, then offering them a slight increase in rent (yet below market) is a  great way to avoid a turnover.

Best of luck!

Does professional property management carry over with purchase?

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