Purchasing 4 plex w/ tenants

6 Replies

Hello BP,

I just had an offer accepted on a 4 plex which is completely tenant occupied. What are steps or items I need to do during due diligence and the transition process?

I'm in FL if that matter.


Thank You!

Originally posted by @Account Closed :

@Junior Correa Congrats! First do the "normal " due diligence on the house, (inspections, title, etc.) As for the tenants first is ask for a copy of the rent roll... Make sure this looks good, and then ask for copies of all leases, read the leases thoroughly.

 Thank you Nick. How does the transition of security deposit go? Is rent prorated like prepaids?

I have a couple duplexes but they were vacant when I purchased them and never had to deal with transitioning tenants.

Originally posted by @Junior Correa :

Hello BP,

I just had an offer accepted on a 4 plex which is completely tenant occupied. What are steps or items I need to do during due diligence and the transition process?

I'm in FL if that matter.


Thank You!

 Junior,

 I'd make sure your new tenants sign 'your lease' as soon as possible. I'm not sure of the laws in Fl, but I'd look in to it. You never know what the previous owners might have agreed to. I'm thinking things like lower rent for the tenant that cuts the grass, or maybe different rental due dates.. things like that.

Definitely do new leases, even though most states do put the lease as priority over transfer of ownership.  Few reasons: First, you show your tenant(s) that you mean business and you are a professional.  Second, you can determine right then and there what their level of happiness they have for their current home.  This way if they aren't happy and don't want to sign, you can at least work with them and be super nice so they let you try and rent the place out knowing they may give you notice..

DON"T TRY AND RAISE THE RENT right away.  Unless you've inherited a chronic non-payer that you want to push out.. Keep rents the same and provide a better experience for them under you than they had under prior ownership.  That will come back to you ten fold.  Tenants (honorable ones) stay loyal if you show them respect and care about their needs..  My $.02

items I can think of are:

1. check their current leases, move them over to your lease as soon as possible.

2. tenant estoppel is a must. This has helped me big time when a current owner swears their is no last or sec dep in escrow....all the tenants said YES, there is !  Also, don't forget your responsible for past interest on the money held (at lease in MA)....so calculate that if owners tries to give original amount.

3. Verify who really lives there and what side deals that may be in play (can be part of #2 above)

4. Current month rent should be prorated, but any escrow should transfer all to you.  Of course, open new escrow accounts asap!