Dublin, CA · Member since 2011 · 10 posts · 0 votes
So I just closed on a fourplex in Stockton and I have a guy collecting rent who I inherited from the previous owner. He tells me yesterday that he has everyone's rent and we start going through the numbers and I notice he's offby $100 on each unit and $150 off on 1 of them and I say no that's not right. I have the leases and estoppels right here and they are stating something else. Now this is what I based all of my calculations on and if its less $450/mo then this property I just closed on is a dog and a monthly loser.
So the rent collection guy says that this is the rent everyone has been paying for a long time and if I raise it the people will leave. This is a concession the previous owner made to everyone verbally. So I say to myself what the heck? The lease and estoppels have been wrong and forged and information not disclosed and now what should I do?
Ideas welcome. Looking for help and guidance from our wonderful community.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
Why would someone sign a paper saying they were paying $550/month when they were paying $450/month? Let them know that this is what they signed and stated and you need to collect what was in the lease. If they balk or threaten to leave, maybe you should let them.
Look at market rent. If you're within market rent, let them know that they can move, but they're just going to be paying $550/month somewhere else and they have the headache of moving.
I even get the security deposits & first month prorated rent being credited through the escrow. A
You should always get this when closing on an occupied rental, if it's not on the HUD-1 you should point that out and make sure that it is fixed. You get the prorated expenses for the time you own so you should get the income as well.
@Sorab Gakhar I'd agree you can't really do #4 until after close, a lease is a legal agreement and since you don't have legal right to the property yet I don't see how you could enter an agreement. You could also only do #4 assuming that the previous leases are expired otherwise you are bound by the terms in the current lease unless you can get the tenants to agree to cancel the existing lease.
Sounds to me like you tried to do everything you should have prior, and actually did. You just didn't realize the question you didn't ask because you covered it in the estoppel.
Have you considered going after the seller in court? I'm curious less from a "making you whole" perspective and more from the he committed fraud perspective and would like to see him punished. Though I do know that sometimes it's just not worth it.
@Matt Devincenzo I did think about taking legal action, was recommended by other posters, but i'm not a person who likes to take legal action unless i must. Also i found out from my agent that the guys wife has cancer and he's been focused on taking care of her and its possible he let things go on the property to take care of her. While his information was negligent and potentially an issue for me, i think i've been able to take care of the issues and i don't really care to impose more trouble on someone going through a tough time.