Rental Property Investor · Oakville, CA · Member since 2018 · 23 posts · 7 votes
Hey BP,
I am working on a deal with a tenant in place .. the rent is below market value and the current lease still has a month to go. How soon can I increase rent ? Is it possible to request termination of the the lease in the closing agreement? What are the other salient issues associated with this type of transaction that I need to watch out for .
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
7y
If you haven't closed yet, you can make the transaction contingent upon it being turned over to your vacant (tenant-free). The owner can then delay your closing, approach the tenants to exit early (cash for keys, etc.), or simply decline to do so. But one thing is for sure: you cannot change the existing lease.
If you accept the property with the tenant, you're stuck with the existing lease until the term expires. However, if you're a month out, it's probably time to send a notice to the tenant advising whether or not you will be renewing the lease and at what price. Check the lease for when notice is required by either party (and your state's Landlord-Tenant Laws; easy to do, on line).
And, before you close when accepting tenants:
1. Obtain the lease and read it.
2. Where are the security deposits? They need to convey to you at closing.
3. Obtain rent rolls. Has the tenant been paying on time? Are late fees owed?
4. Obtain tenant contact information and any screening information.
And, before you close - with or without tenants:
Do a Final Walk-Through of the property to ensure that everything you think you're buying is actually still there. If you haven't had an inspection, get one; at least a Major Components Inspection to check the roof, AC, plumbing, electrical. And, check for code violations.
This isn't investing in real estate. It's buying a business that has real estate included. Don't wing it...it can go from a good deal to a really bad one fast when you haven't covered all the bases.
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
7y
If you haven't closed yet, you can make the transaction contingent upon it being turned over to your vacant (tenant-free). The owner can then delay your closing, approach the tenants to exit early (cash for keys, etc.), or simply decline to do so. But one thing is for sure: you cannot change the existing lease.
If you accept the property with the tenant, you're stuck with the existing lease until the term expires. However, if you're a month out, it's probably time to send a notice to the tenant advising whether or not you will be renewing the lease and at what price. Check the lease for when notice is required by either party (and your state's Landlord-Tenant Laws; easy to do, on line).
And, before you close when accepting tenants:
1. Obtain the lease and read it.
2. Where are the security deposits? They need to convey to you at closing.
3. Obtain rent rolls. Has the tenant been paying on time? Are late fees owed?
4. Obtain tenant contact information and any screening information.
And, before you close - with or without tenants:
Do a Final Walk-Through of the property to ensure that everything you think you're buying is actually still there. If you haven't had an inspection, get one; at least a Major Components Inspection to check the roof, AC, plumbing, electrical. And, check for code violations.
This isn't investing in real estate. It's buying a business that has real estate included. Don't wing it...it can go from a good deal to a really bad one fast when you haven't covered all the bases.
Rental Property Investor · Oakville, CA · Member since 2018 · 23 posts · 7 votes
6y
@Patricia Steiner Thanks indeed for your advice. I have the lease now and it ends 11/30. The closing is however 10/26. The rent is $100 below market value Inspection is scheduled for the next 2days . Really wonder if I can request rent increase immediately at end of 11/30