Just put an offer on duplex with tenants, how should I prepare?

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Just put an offer on duplex with tenants, how should I prepare?

Jonathan Perez
Realtor · Jacksonville, FL · Member since 2013 · 227 posts · 35 votes
I put in an offer on a duplex. And there are tenants on both sides. One of the tenants are being evicted. The other side is on a year lease....there is a property manager already in place which I may consider keeping.. IF my offer is accepted, how should I prepare to enter this. Should I introduce myself to the tenants? Should I not? Should I set up a business account for the rental income? Should I set up an LLC? What are some systems I can put in place? I was planning on house hacking it, so I'll be living in the side where the other tenant is being evicted from.
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Rob S.
Investor · Portland, OR · Member since 2014 · 65 posts · 46 votes
9y

@Jonathan Perez Make sure to have the tenants and current owner/seller sign an estoppel certificate before closing. All the best!

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  • Brandon Hanks
    Investor · Fayetteville, NC · Member since 2016 · 16 posts · 12 votes
    9y

    How's it going? I'm currently in the process of purchasing a Quadplex, with an excepted offer. I just finished LISTENING to "The Book on Rental Property Investing" it offers a lot of knowledge as you move forward on your Real Estate venture.. Another one I would consider is "The Book on Managing Rental Properties." I'm at the point now that PM is getting a good chunk of change from me every month, I haven't finished the book yet but I'm getting great insight on the duties and responsibilities the PM takes on, and whether I'm prepared to take on those duties.

    I'm telling you about these books because they are helping me a ton on future decision making with Real Estate.

    Also, with the house hacking, Lets just say that I would house hack only if I was using VA or FHA for financing. If you are prepared to make that down payment using conventional, I would rent both sides out and maximize that passive income. Wait a few months and find another Multifamily property and purchase the property using a FHA or VA loan which requires you to occupy the residence.

    When considering a LLC I would consult a RE attorney. From what I understand recently lenders have been calling loans due on sale.

    All in all, congratulations on your investment opportunity.

    3Reply
  • Shaun Patterson
    Property Manager · West Palm Beach, FL · Member since 2012 · 296 posts · 143 votes
    9y

    If you are planning on living the rest of your life in this duplex then yes do everything your self. But if this is just the starting point in your real estate career and you are planning on building off of this first property I would get the foundation started now before you even close on this one. Just my opinion but its better to get this stuff over now instead of getting 5-10 properties and now you have to figure out the type of business you will set up and what property manager you will be using (if you don't have one now and you are not sure about the one that is with the property it will make sense to weed all the good and bad PM's now). Also I would be very weary about PM's that come with properties that I am buying I would ask around to get some advice. Ask them questions about how the handled the property and how they market the property. Run the numbers that you came up with during your analysis of the property to see if they agree or if they have any changes that they would make. I would only hire a PM if he knew more than I did about what I was planing to do with the property.  I would hate to call a PM and they be just as lost as I am. Regarding the laws in your area that should also be something that you and your PM know a lot about.  

    3Reply
  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 644 votes
    9y
    Originally posted by @Mimi H.:

    Before you make any decisions, negotiate what the PM can offer. If you have a great tenant, you may not need a PM, if you have horrible tenants and a horrible PM then it's just a bit of a nightmare situation all around.

    Definitely become familiar with your local rental/eviction laws - they vary greatly. EG: there are certain parts of NY that don't do any evictions from roughly Oct - Feb and bad tenants have learned to work the system. 

    May also be beneficial to use BP to find other investors in your area so you can be prepared for what's up.

     What parts of NY won't allow evictions in the winter?

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  • Mimi H.
    Investor · Mountain View, CA · Member since 2014 · 120 posts · 51 votes
    9y

    Large parts of Long Island. It's not written in, it's just not done and the process drags until the Spring.

    0Reply
  • Eric Guiltinan
    Austin, TX · Member since 2015 · 40 posts · 33 votes
    9y

    You definitely do not need a PM. If you can't handle one unit that is right next to your unit then you probably have no business being in this game. I've gotten tons of valuable experience managing my units and when I eventually hire a PM I'll know what to expect of them. You also do not need an LLC. Your home owners insurance comes with 500k liability insurance. That's plenty for you right now. Also, like @Thomas S. said, you need to familiarize yourself with South Carolina landlord/tenant laws.  Many states require that the security deposit be held in a separate bank account from the rent.  That isn't the case for owners in Texas but it is for PMs in Texas.  Either way you should get a separate account for accounting purposes.  It doesn't need to be a fancy business account.  Just any regular checking account will do.

    Finally, as one duplex house hacker to another, I suggest you get the tenant set up with an online rent collection.  I use cozy.co and really like it but just search the forums and you'll get others advice.  Sometimes the most awkward part of the landlord/neighbor relationship is the collection of rents.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    9y

    I agree that your property should be able to support the fees of a PM. I own 17 properties that I manage myself. It is all about having systems in place. Have a strong lease that explains the tenants responsibilities. Things like they are responsible for plumbing stoppages etc. I have them go to my bank and deposit the rent. They all have slightly different amounts so it is easy to see who has paid. I don't chase the rent. They pay or they get an eviction notice. They get trained real fast. My lease states that this serves as the "5 day notice" so I don't have to wait on that. If there is an issue they text me and I text my handyman or HVAC guy to go take care of it. So it takes little effort to manage my properties.

    3Reply
  • Steven Mitchell
    Investor · san antonio, TX · Member since 2016 · 133 posts · 43 votes
    9y

    id like to fifth the advice here.  my first RE venture was living in a triplex and managing it.  Buy something good enough where the deal works with paying a management company and let them take care of it.  

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