I'm in the process of buying a 4-plex with tenants currently in place.
I have a great property management team in place ready to take over the property when the deal closes, but I'm curious about what will or should happen to the current leases and how the transition will go. #AskBP
What, if any, suggestions would you have for the transition of tenants to my property management?
When I inherit the tenants, I always sign a new lease with my tenants. That way it becomes consistent with my other tenants, with the same rights etc. etc. (My lease specifically says any prior lease is null and void).
A key point is to keep the rent the same as whatever they pay prior (if rent is reasonable). Usually this is the part that the tenants are most concerned about. You, as a landlord, are concerned about numbers, but definitely beyond that. That's why you should always strive for using your own lease (rather than some inherited lease) if possible.
Those are all great points. Thanks for the reply.
You raise an interesting point that was definitely a point of interest. Rent is below market, not significantly, but I'm buying the property knowing that the next time it needs to be leased it could probably be increased further increasing cash flow.
How early is too early to raise the rent? For reference, we're only talking a bump from $375 to $400 per unit initially.
@Samuel DeMass I keep it simple. You know it is too early to raise rent when you know they won't sign your new lease. Talk to the tenants first (or have your property manager talk to them) to gauge how the tenant feels.
At the very least, you know that your new lease cannot worth more than the existing old lease, at least until it expires. (or else what will be the incentive for your tenants to renew the leases?)
The leases run with the land, so you are obligated to honor the leases in place until they expire. You could ask them to sign your lease. As long as the terms are the same, they may not have a problem with it. Personally, I don't think it's worth the hassle. I would just leave them on the current lease and then offer them a new lease on your terms when their old lease expires.
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