Closing on first property, 12-plex in 1 WEEK!! Tips prior to taking over!? TIA

29 Replies

My husband and I are thrilled and a bit nervous about closing next week on our first property--- 3 four plex's a mile from our home. A HUGE thanks to bigger pockets for helping us crunch numbers, network and give us confidence to take the plunge!

With that being said anything you Pro's recommend we do before we close? 

We are planning to leave a note on everyone's door the day of closing with new contact info, PO Box for rent, parking diagram (parking is tight and can be an issue).

We are thinking of giving everyone a $10-$20 gift card as a 'new owner' gift. We are also condidering a small cookout in a few weeks as a meet and greet, Is this odd? We are doing some exterior updates and want to let tenants know that we will work as quickly as possible. Would you notify tenants of vague plans? 

We have met w/ lawyers, bankers, etc. now I feel like we are going to get the keys and be thrown to the wolves, any tips greatly appreciated!!

Thanks in advance, now to upgrade to a BP Pro 😊

Congratulations @Emmy K. !  How exciting for you guys.  When I take over a multi-family, I send a welcome letter.  In the letter I try and ease fears of massive changes in rent, tell them a little about me/us and include a contact update sheet for them to fill out.  On the sheet I also ask if there are suggestions for the place and whether they have a skill set that could aid us in accomplishing some of the suggestions or help with the place in general.  You may have a painter or an hvac person, etc living in one of the rentals!

I wouldn't send gift cards.  Easing their fears of having a completely new sheriff and rent increases is enough.  A BBQ is a nice idea, but some say getting a bunch of neighboring tenants together is like getting a bunch of your partners together.  Eventually they ask whose paying how much in rent and find things to complain and get worked up about.  

I hope you enthusiasm for LLing and your compassion for tenants continues  long into your career.  Congrats again!

Thank you so much, @Steve Vaughan this is incredibly helpful!

I agree with @Steve Vaughan I send a welcome letter letting them know we are not planning on raising rent at this time.  I would also inform them of any big repairs you are going to be doing, especially if it could disturb them.   Include days and times the crew will be there working.  

Over the next few weeks I would try to stop by and meet them personally (if you will be the PM) and we always ask the previous PM for phone numbers so we can call and introduce ourself on the last day of the month if we have not heard from them. 

I also would not do gift cards.  I have done BBQ with tenants before, but that was a live in triplex so it was a bit different.  I would not do it if I didn't have to live with them.   

Emmy,

Congrats on the purchase.

My recommendations are as follows:

- Leave notes notifying the tenants of a change in ownership. 

- No gift cards.

- No cookout for a meet-and-greet.

- Notify tenants of work that will be done, especially if it's going to be an inconvenience to them. Provide an approximate start and end date. 

- Present yourself as a property manager and not the owner. 

- Remember this is a business venture.  

Good luck!

Congrats. @Emmy K. . I hope to get to this point sometimes this year.

My vote 

no gift card

no BBQ

Regardless, congrats

I concur with the previous comments about allaying fears of a sudden rent increase, not giving gift cards, and not doing a BBQ get together. I would not hesitate letting the tenant know you are the owner and plan to manage the property yourself. Show them you take pride in the properties you own and care about the well being of the people who make their home there.

In addition to a letter of introduction, I would take the time to meet with each tenant one on one. Go over the current terms of the lease/rental agreement and your expectations, so you establish a common understanding. Let the tenants know about your management style and explore common goals you share. Most everyone values safety, let them know you do too. Let them know you value a quiet, clean, comfortable and peaceful living environment. Ask the tenants what is currently working for them and if there are any things they see as needing improvement. Demonstrate that you care about the condition of the property by attending to deferred maintenance as you see it and making improvements. Demonstrate you care about people by taking the time to listen and by being responsive to what they have to say.

In addition to seconding the above advice about no gift cards and no BBQ, I would advise sending a questionnaire to the tenants along with the letter of introduction. We want to know what THEY see as the top issues with their units. At least with the type of units that we buy, there is inevitably more that needs to be done than the budget can contain initially.  While I might think replacing the appliances in a particular unit is the number one thing that needs to be done, they may have leaking faucets, or a drafty window as their number one pet peeve.  We once replaced the cracked single pane window in a kitchen, because that was the worst one in the apartment, and the day that it was installed the tenant asked us why we didn't replace his bedroom window first, because it was blowing cold air on his head when he slept.  We had no idea, because it didn't look bad, and we hadn't asked. We could have spent the sane amount of money and had a happier tenant. 

I cannot thank you all enough--- this is wonderful advice and a great community.

It makes complete sense on no gift cards and no BBQ. It's a business.

A questionnaire is not something we considered--- wonderful idea. Going over safety/ lease terms also excellent. I feel more prepared already. 

Here's to a great year of investing for all! 

CONGRATS! In case if you are going to increase the rent - this is your best chance as people expect changes and afraid. Inform them that at the lease renewal you plan to increase the rent up $15-25 or so, if you are planning on this, so the tenants would not be afraid that you are going to make a $100 increase

Just to drive home the point, I agree with everything already stated. It was definitely a nice to offer the extras you were going to do but very unnecessary. It may do more harm then good. Try to find out what the tenants need fixed and that will make them much happier. 

CONGRATS on your purchase!

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I also wouldn't do a bbq or gift cards. It is important to keep a professional relationship with your tenants without giving the impression that you are their friend. If they get too comfortable with your relationship, that is when they try to take advantage of you. It is crucial to strike a balance between sternness and amicability.

We cannot thank everyone enough--- so far it's been a great transition. These tips and ideas were incredibly helpful and useful. No BBQ, no gift cards, thank you!!

We gave questionnaires out to all tenants and it's been incredibly helpful, and reaffirmed many of the repairs we planned. There were a few surprise issues but we are happy to know about them now. 


@Jane A. thank you for the incredibly helpful tip. This is one question we have gotten and not yet answered. On that note, what about the tenants that are month to month and $100 or more BELOW market rent (we have 2) Would you do more than a $25 increase? Thanks again to everyone!

I had such case as well :)))

the average rent was $700-750 and one tenant was at $550

He started our communication with complaining that previous landlord increased his rent two times already $50 each time after they took over this property 7 yo or so. I just decided to do the same. I told him that in half a year (he was on one year lease) his rent will be $50 more. He was extremely unhappy and started to ask for different improvements :))) Really we helped him out with some of his pain. So in half a year we increased his rent $50 and again $50 after 6 months. Now he is paying $650, still below the market. But it is a win win situation now. I do not need to rehab his unit and building right now and spend 2-5K or even more. And he is paying below the market.

I have another place where I don't want to spend money right away and when we took over we raised the rent $25 first year and I am going to do this again one more time and stop for current tenants because turnover will cost 3K or more as units were not updated for a long time. It is better to keep the rent $50 below market. Experienced landlords do not increase the rent for current tenants at all as they do not want headache connected with tenants turnover. But if you really want to increase cash flow from this building and are ready for some rehab expenses - do it step by step. Talk to tenants, ask them first about their needs. Understand their circumstances and decide what will be the best course of action in your case. Some times the best action is "no action" :))) Do not underestimate possible budget of turnover unless you have a handymen in your family.

I understand your thoughts of having a BBQ, but the bottom line is you want to be FRIENDLY to your tenants, but not be FRIENDS with your tenants. Getting too close can lead to problems like "they won't mind if my rent is a little late, they're friends." Instead of a gift card you could offer them an upgrade to their apartment. Something inexpensive that you were going to do during the next vacancy anyway.

Thank you so much, @Jane A. --- you have saved me nights of sleep :) this is incredibly helpful!!!

Congrats @Emmy K. !  This is an amazing step!

We are getting there- currently at 10 units since we started 2.5 years ago, and we have 2 more under contract for 6 more units.

You got great advice already, I agree with no gift cards and no bbq, but do think we might implement a small gift card sent on the tenant's birthdays.  I was thinking of $5 or so to a local coffee or ice cream shop.

Kelly

Originally posted by @Marcia Maynard :

In addition to a letter of introduction, I would take the time to meet with each tenant one on one. Go over the current terms of the lease/rental agreement and your expectations, so you establish a common understanding. Let the tenants know about your management style and explore common goals you share. Most everyone values safety, let them know you do too. Let them know you value a quiet, clean, comfortable and peaceful living environment. Ask the tenants what is currently working for them and if there are any things they see as needing improvement. Demonstrate that you care about the condition of the property by attending to deferred maintenance as you see it and making improvements. Demonstrate you care about people by taking the time to listen and by being responsive to what they have to say.

I can't recommend this enough.  When we self-managed our properties in NYC we did this, and a large part of selecting our property management firm here in Raleigh was their approach to building relationships with tenants and making sure that everyone was working from the same game plan - understanding that as a tenant they are responsible for keeping things clean, paying on time, etc. and as a landlord (via our property management) we'll respect that relationship by ensuring that maintenance items are taken care of ASAP, renewals for valuable tenants will be offered without question, etc.  While it is absolutely a business, it's also, to some extent, a partnership between a tenant and a landlord and having a clear understanding of expectations and goals is critical.

Originally posted by @Jane A. :

It is better to keep the rent $50 below market. Experienced landlords do not increase the rent for current tenants at all as they do not want headache connected with tenants turnover. But if you really want to increase cash flow from this building and are ready for some rehab expenses - do it step by step. Talk to tenants, ask them first about their needs. Understand their circumstances and decide what will be the best course of action in your case. Some times the best action is "no action" :))) Do not underestimate possible budget of turnover unless you have a handymen in your family.

 100% this.  People tend to get very myopic and increasing cash flow without thinking about the long-term effects.  While an extra $50 a month for a unit may be nice, what's the alternative to that extra $600?  How much does vacancy, re-leasing, and turnover maintenance cost you?  I can tell you for most of my units my all in costs to turn a unit are in the $2000-$3000 neighborhood assuming no major repairs are needed (eg; that's the price for vacancy, leasing fees, paint, carpet cleaning, other misc. repairs).  It's much more valuable for me to just let a tenant run their course at a lower rent and enjoy the stability of the income.  Of course, this is market dependent - I can without question increase rent at renewal time in some markets (New York City) whereas I avoid rent increases if at all possible in others (North Carolina)

@Emmy K.

Congrats on the deal! Getting a little tougher in the louisville area to find deals that work. Again congrats. 

Thank you so much, @Keith Nelson!! 

@Jason James, feels like we've searched forever! Thank you, exciting times!! 

@Emmy K.

Congrats!  Very excited for you all!  You've received plenty wonderful advise already.  Be professional, yet considerate to your tenants needs.  If the current tenants are "keepers" I'd try to keep them in place. 

What area did you purchase in?

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