Inheriting Tenants With No Leases

[Ashley B.]

I have a 6 unit multi family property under contract as of this morning and just found out that there are no leases. This is my first deal and I’m shocked to say the least. However, I know there are pros and cons to this situation. Pros being that I can give the 30 days notice to any undesirable tenant the day of closing. However, with one apartment already vacant that will be completely renovated after closing, I don’t want another vacant apartment. The current rent roll the sellers provided to me twice never matched with what 2 of the tenants told me they were paying so on the positive side, I will have leases ready to go on the day of closing with rent at current market value. Two of the tenants have been there 10 years so I don’t anticipate them leaving over an extra $50/month. This does add extra layer of stress and concern but the more I think about it, the more I’m coming around to the idea that this could potentially be a good thing. Has anyone else been in a similar situation when purchasing a smaller multi family property? How did it turn out for you?

[Aaron K.]

You should get everyone to sign tenant estoppel forms so you know for sure what the rent they are paying is.  If it were in CA you would have the same time lag as normal to raise the rents to market rates or get the tenants out 30-60 days depending on various factors.