Hi BP Folks,
One year since I started on BP, I've finally purchased my first Buy and Hold in Chicago Pilsen area. It's a 3 flat and is fully rented, due to my FHA loan guidelines, I will be moving in once one of the leases is up. I have already communicated this with the tenants and they are understanding that they cannot renew their lease.
I am meeting one on one with the tenants this weekend and I want to ensure I communicate the appropriate rules and guidelines.
There are parking spots that the tenants use, free of charge, one of the tenants seems to think that I am responsible to clean the snow from this parking space. Am I correct to assume that I am not at all responsible for this?
Do I need to have them re-sign any leases? Or do I automatically assume the current leases.
Anything else I need to communicate other than where to reach me?
Big thanks to you all.
Is it a parking lot or free "assigned" spaces. What does your lease say? What has been the previous precedent? Usually in a multi-plex it is the landlords responsibility unless specified in the lease. So figure out what you currently have in your leases and than you can note for the future what you want in during renegiotations.
Congratulations on closing your 3-flat! It's a great accomplishment so keep up the momentum..rinse and repeat.
Couple Things: (Not a legal advice. please do your due diligence)
1. Read up the Tenant-Landlord hanbook for Chicago. Unfortunately, I don't have a link handy but make sure you read and understand the same.
2. Make sure you read the lease. The lease should clearly specify the responsibility for the common areas. If the current lease states it's your responsibility then it's your responsibility.
3. You will maintain current leases till they expire i.e you automatically assume the lease. So you will not need to re-sign the leases.
4. Just provide a notice to tenant's of new ownership/management. Typically, any important notices I send via certified mail (expensive but holds will hold up in court). Make sure you list when tenants can call you and what classifies an emergency unless your lease specifies the same and when they can contact you (Tip: use a Google Voice #). I would work with a handyman company - I am sure BP members in Chicago can recommend you one. So any small things they call the company upto $200 or whatever you see fit. So essentially they can be your first line of defense so that you don't get calls.
Good Luck and wish you much success
@Elizabeth Colegrove , from what I understand the back lot acts as a free parking lot. As far as assignment, nothing is stated in the lease regarding parking. I have to discuss with the tenants as far as what was the precedent. I will let them continue parking until the new leases are due to be signed.
Congratulations on your purchase! Yes. Read the current leases. You will need to honor the terms of the current leases unless you and the tenants mutually agree to change the terms. You will also need to provide documents that will reflect the change of ownership and how to pay rent. Generally, for a multiplex, the landlord would be responsible to take care of all common areas, including landscaping & snow removal. However for areas designated for individual tenant use (like a garden bed in front of the unit, enclosed back patio area, or an assigned parking space) you could write it into the lease as the responsibility of the individual tenant to whom it is assigned.
If it is a tri-plex, will you move into only one of the units and still rent out the other two? Do all the leases expire at about the same time? Are all three units comparable? If they were I, I would not be too quick to tell the tenants their lease will not renew. Instead, I would wait to see how the three units and how the three tenants compare. Observe and listen attentively. I would introduce myself and share with them information about myself, such as my management style and my mission/vision/values regarding owning and managing residential rental property.
I would let them know it is important to me to maintain the properties well and I would ask them if there is anything in their apartment that currently needs attention. I would also schedule a walk through each unit to establish the current property condition and sign with them an updated "Property Condition Report". If I had their move-in checklists, I would take a look at those ahead of time so I could ask about the current condition as compared to the move-in condition. That will help me document for damages. Then I would get to work and attend to repairs and maintenance needs.
These are your tenants now and two of them will be your neighbors as soon as you choose one unit to move into. Think about how you will interact, as you will be wearing two hats... landlord & neighbor. Establish clear guidelines for how you want the tenants to contact you for emergency needs and for routine matters. You may choose to move into the unit that is in need of the most remodeling, or you may choose to move into the unit that has the least desirable tenant - so they will move out.
Marcia Maynard, Fischer Properties | Podcast Guest on Show #83
Just remember you are in charge! You own this asset and its a business. So while you definitely want to meet your tenant don't let them place demand on YOU! You need to go in to a position of strength with your knowledge and what you expect. Think of it like starting a new job as the boss. You want to get a way of the land, but you are going to be in charge. So just make sure that while customers service is important, you can be professional and still set ground rules. I have found being a "firmer" landlord has made my life alot better.
- thank you for the detailed reply! I've already given out my cell # but it all happened so fast that I didn't have a chance to create a defensive route to getting calls. Will note for the future.
I plan on creating a separate email that I can use when i'm out of town (which happens a lot) that way I can forward to a friend to take care of any needs.
I like that you mention "areas designated for individual tenant use are the responsibility of the tenant". I can certainly communicate that as one of my rules if the parking spots are assigned.
It's a Tri-Plex, 2 identical units expire in June/July and the third is a larger town home mo/mo. I would move in to one of the identical units while letting the mo/mo go on a 6 month lease as per their request. I didn't want to move into the town home as the rent potential is a lot higher.
You also make a good point about them being my neighbors, certainly something to consider.
Fantastic feedback - thank you so much!
- I certainly need to work on my firmness and letting them know who's boss.
Oh its taken me awhile! But once I started using NO more than yes! Treating it like a business and having a 14 page lease. My life got SO much better :) Honestly once I became the firm landlord, I was respected a whole lot more than "nice" accommodating one :)
@Polina Goncharova Congratulations on your 1st property. So, the cat's out of the bag & your tenants know you're the landlord. Yikes. Everyone has different business policies but we never let tenants know anything about us. No phone numbers, addresses... If we ever moved in to one of our own properties we would just be another neighbor. If the tenant ever looked on a public record they would see that the property was owned by an LLC or a Trust. Why? Asset Protection. If you're going to manage it yourself definitely get a google voice number; email & physical address for correspondence. You may also want to consider seeing if you can get the property quit deeded in to a Trust or LLC for the public record. Check your mortgage agreement to ensure that it would not trigger the due on sale clause before proceeding.
Good stuff @Crystal Smith
Those are all such important points! Once the tenants turn over I will need to be more cautious on giving out my information. It all just happened so fast I hadn't prepared myself as a business.
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