Inherited Tenants - What to do???

Question

Friends:

Thanks to some great info on this site (Mike OH etc), I finally am taking the plunge.   I will close on my first investment property in the next 3 weeks.

I have many questions:

The rental is currently occupied.  But, the lease expires in June.  I am planning on renewing their leases - they indicated their desire to do so.

Do I do a credit check, make them fill out an application form etc. as a standard procedure?

What are the other watchouts - things I need to do to stay out of trouble - with law and financially.  I live in NJ.

I know I need to open new back accounts for the deposits.  Other than that I am pretty clueless right now.

Any help is greatly appreciated.

thanks,

Amy

Ivan Jouikov · Answer

Can you give an itemized list of what were your "couple of thousand" expenses involved with checking on the property?

Amy Kellogg · Answer

Aly, the property is near Bridgewater, NJ.

BTW friends, looks like I won't close afterall.

We had the inspection done a few days back.  There are a A LOT of structural issues I did not realize it had. Part of the structure is apparently crumbling with termite damage.  Anyway, I am glad I did the inspection carefully.

Another issue that put me off was that they never told me that one unit is owner occupied.  So, they were really collecting only 1/2 the rent they claimed they were collecting + even that tenat is vacating+ there is no lease - all oral and month to month.

A lot of lessons learned here (at the cost of couple of thousand) - never trust anything the current owner says unless you verify it.

Well on with the property hunting again.

AK

Aly W. · Answer

Good luck Amy! I'm a landlord in Trenton. Where is your property?

Amy Kellogg · Answer

Thanks Mike.  One of the things that worried me was that I believe one of the tenants (it is a Duplex) bid on the property (according to my agent).  So, my concern is that they may be bitter and try to cause issues.

But, I cannot worry about them now - as long as I take reasonable precautions.

I will ask for the tenant file.

thanks,

AK

Michael Rossi · Answer

Amy,

Congratulations of closing on your first rental!  This is a great time to be in the rental business.

I try to get a copy of the tenant's file from the current owner (if there is one).  The current owner should at least have an application and lease for the tenant and may have a copy of their credit report.  I do not do another credit check.  The tenant's already in there - so there's really no point.  What is important is that they've been paying on time and all you really have is the owner's word on that (sellers often lie).   I do run a criminal background check/eviction check so that I know what to expect.   A person that has a lengthy criminal record, and especially a recent criminal history, is going to cause YOU problems.  Criminals will almost certainly need to be evicted in the near future.

Be sure to study your state's tenant-landlord law.  You need to become an expert in that area!

Good Luck,

Mike