@Nam Tran When you say "did our walk through" is this a property you already have under contract and are ready to close on? Or was it just a showing?
If it was just a showing and you haven't offered yet, I recommend either making an offer that the property be vacant upon sale (maybe offer a little more to entice the current owner to do this) so you do not have to deal with the issues you mentioned or it is probably best to find a different deal.
In my experience with clients I have here in CT, it is always difficult for them when they inherit problem tenants when acquiring their first property. It isn't worth it in most cases to pursue properties like this your first time around.
A lot of newer investors (not saying you are) are intimidated by vacancies more than they are intimidated by problem tenants. Inheriting problem tenants will ALWAYS lose you more money than inheriting a vacancy will when all is set and done.
As you get more experience a property like this can be a good opportunity, but it can be overwhelming for your first one.
Hi Nam, some lease agreements allow new landlords to give "notice to move" when they buy a property or to raise rents.
Do both. Give "notice to move" and raise rents.
Read the leases. Since you choose to invest in the Socialist State of Washington, be prepared for other Landlord Tenant laws you may not like. But, read the leases, and the Landlord Tenant Acts for Washington and for Pierce Co. regards, Ken
What do you really know about Washington State to make such statements? Have you lived here or owned residential rental property here? Our Landlord-Tenant laws are actually quite balanced. Not overly tenant friendly and not overly landlord friendly.
The OP said the current rental agreements are M2M, not long term leases. As long as the existing rental agreements don't restrict him, and if his rental property is not in King County, he can execute a "no cause" termination of the rental agreement. This can be done with as little as 20 days written notice prior to the end of the rental period.
However, to effect a smoother transition or move-out plan, with less tenant damage and less tenant hardship, he could negotiate for a better outcome. He may be able to turn around either of these tenancies, once he puts in place his own rental agreement. Then he wouldn't be faced with two vacancies at the start. Depending on his management style, he may find the tenants choose to move-out on their own if he establishes new property rules that they don't like. That's what we did with an 8-plex we bought. Some of the less desirable tenants chose to move out quietly, on their own, once they saw our new rental agreement and saw we would enforce it. Some chose to change their ways and became good tenants. We got the outcome we wanted without needing to terminate anyone's rental agreement.
Inherited tenants can often be the worst kind. The previous landlord has trained them to be the way they are and it is rare that it would be worth the new landlords time or effort to retrain. Bad tenants 9 times in 10 are the fault of their landlord.
The best business approach is to simply not renew, one at a time, allowing you to keep some rental income while transitioning to your own new tenants.
The reality is that replacing rather than retraining is the easiest and fastest approach.
@Nam Tran When you say "did our walk through" is this a property you already have under contract and are ready to close on? Or was it just a showing?
If it was just a showing and you haven't offered yet, I recommend either making an offer that the property be vacant upon sale (maybe offer a little more to entice the current owner to do this) so you do not have to deal with the issues you mentioned or it is probably best to find a different deal.
In my experience with clients I have here in CT, it is always difficult for them when they inherit problem tenants when acquiring their first property. It isn't worth it in most cases to pursue properties like this your first time around.
A lot of newer investors (not saying you are) are intimidated by vacancies more than they are intimidated by problem tenants. Inheriting problem tenants will ALWAYS lose you more money than inheriting a vacancy will when all is set and done.
As you get more experience a property like this can be a good opportunity, but it can be overwhelming for your first one.
Yikes, I feel your pain. I agree with @Thomas S. Do not renew one of them, clean the unit up, and get a new, higher quality tenant in there. Then repeat with the other one. I hope you have a security deposit for each that you can use for some of the damages beyond normal wear and tear.
Just a quick note.. the property you buy is in the condition as when you purchase,, you do walk thru right after and do a condition check sheet, So you then have basis of what you can charge for AFTER that for any damages.. the conditon of the unit at your possession is what your buying,, so prior damages aren't something you can charge for.
Ask in your purchase agreement building delivered empty.. would be best way, if you need to show it's income earning for your purchase with your bank,, then accept as is and do non-renewal as soon as you can get started with that process.. but be clear the new landlord must not change any lease terms with current tenants, you want them only on month to month terms for now.
If you make an offer for the property to be vacant upon sale, then I as another investor will come along and offer to take this problem off the current landlord's hands, perhaps at a discount!
The real estate market in Lakewood/Pierce County/Washington is HOT. Inventory is low. Anything that causes a seller more work or a delay in the sale, may cost you the opportunity to buy.
No need to worry about non-renewals, as the tenants are already on month-to-month rental agreements. Those agreements can be changed with a 30-day notice.
Hi - I find that whenever I purchase a new building, I experience problems with the existing tenants. I currently have 16 units. I always prefer a clean slate. It's very difficult to train other landlords tenants. Can you afford to let both tenants go? and a full clean up and remodel? I live in Connecticut so the best approach for me would be to serve the worst tenant a 30 day notice to quit or vacant ( possibly the one with the dog). I would have the other tenant sign a new month to month lease - I would go over all the rules and regulations with the tenant. I would immediately have the exterior of the building cleaned. (If you keep the one with the dog) I would explain that dog feces must be picked up bagged and disposed of, pets must be on leashes at all times, and never tied up in the yard (this is actually a section of my lease- under pet care). I don't really want pets so I charge $25.00 extra per month for a pet and never allow large animals in a multi. I also do not allow any belongs to be left in the halls, porches, or yards ect. with the exception of a grill (this is huge) I have a clause stating these items will be disposed of without notice. Your going to have a hard time finding good tenants if the outside looks terrible! ( I also don't allow automobile repairs to take place on the property)
I find that I have the best results when my units are modern. My husband and I are is really handy so we can remodel very affordably. Therefore, If you can afford it. I would start worst unit and modernize it, get it on the market and then If the other tenant is still a problem (which I'm betting they will be), begin with a 30 day notice to quit. In your situation it may be difficult to clean up one side and keep the other tenant ie: duplex tenants live close together, they need to be compatible or your going to get complains and high vacancy rates. I also charge double security and first months up front!
@Nam Tran I think that @Deanna McCormick has a good suggestion about asking for the property to be delivered empty. This is a good way to draw extra attention to the fact that the tenants are horrible. It is likely part of the reason the current owner is selling. However, I agree with @Marcia Maynard that the landlord likely will not want to go through this extra work.
The point is that the bad tenants are your bargaining chip and are the best way for you to get a discount. You can present two offers, one with the tenants gone and one the tenants stay. If the tenants stay, knock off several thousand for future removal fees. Explain when presenting the offers that it will cost you thousands to get these tenants out. Price the "tenant gone" offer at the price you want to pay (even if the tenants are still there). The "tenant stays" offer is just lower to make the tenant stays offer seem better.
Let them know they can accept either offer or give a counter to either offer. I don't think it matters because you can deal with the property either way. Just make sure the numbers work and as Marcia pointed out the market is hot, so you may not get quite the deal you are looking for.
Being in this market (my office is just a few miles south of Lakewood) as @Marcia Maynard mentioned, the market here is very tough right now for buyers. If you pile on additional requests to the seller, you run the risk that another buyer with a cleaner offer will beat you out on the deal. My mom just lost a deal yesterday and she was 7K over asking. There is a severe shortage of inventory, so you as the buyer need to make your offers as clean and easy as possible or potentially lose out.
As mentioned above, your on a month to month tenancy with them, so change the rules, increase the rents on the worst of the two and get them to leave or get paid for the additional head aches. Then go in, clean it up and get better tenants with your rules in place. Then turn to the other inherited tenant and give them the new rules and higher rents, if they don't like it, they can move and you rinse and repeat.
Best of luck to you.
What do you really know about Washington State to make such statements? Have you lived here or owned residential rental property here? Our Landlord-Tenant laws are actually quite balanced. Not overly tenant friendly and not overly landlord friendly.
The OP said the current rental agreements are M2M, not long term leases. As long as the existing rental agreements don't restrict him, and if his rental property is not in King County, he can execute a "no cause" termination of the rental agreement. This can be done with as little as 20 days written notice prior to the end of the rental period.
However, to effect a smoother transition or move-out plan, with less tenant damage and less tenant hardship, he could negotiate for a better outcome. He may be able to turn around either of these tenancies, once he puts in place his own rental agreement. Then he wouldn't be faced with two vacancies at the start. Depending on his management style, he may find the tenants choose to move-out on their own if he establishes new property rules that they don't like. That's what we did with an 8-plex we bought. Some of the less desirable tenants chose to move out quietly, on their own, once they saw our new rental agreement and saw we would enforce it. Some chose to change their ways and became good tenants. We got the outcome we wanted without needing to terminate anyone's rental agreement.
@Marcia Maynard - I'm surprised you didn't know about this:
"By Daniel Beekman Seattle Times staff reporter
"Seattle is apparently breaking new ground by requiring landlords in the city to rent their housing units on a first-come, first-served basis."
"The Seattle Office of Civil Rights (SOCR) will begin work on how to implement and enforce it"
"Prospective renters will also have the option to sue a landlord"
Usually when the SOCR gets involved, it gets very very expensive to the Landlord to try and keep their property. Seems like the balance is in favor of the Tenant. That is PRIVATE property the City is dictating that has to go to someone the Landlord may not want. Since the prospective tenants can sue, and there are plenty of lawyers waiting to take the cases, this should be fun for the Landlords right?
As goes Seattle, so goes Washington. I stand by my original comments.
Ken
What do you really know about Washington State to make such statements? Have you lived here or owned residential rental property here? Our Landlord-Tenant laws are actually quite balanced. Not overly tenant friendly and not overly landlord friendly.
The OP said the current rental agreements are M2M, not long term leases. As long as the existing rental agreements don't restrict him, and if his rental property is not in King County, he can execute a "no cause" termination of the rental agreement. This can be done with as little as 20 days written notice prior to the end of the rental period.
However, to effect a smoother transition or move-out plan, with less tenant damage and less tenant hardship, he could negotiate for a better outcome. He may be able to turn around either of these tenancies, once he puts in place his own rental agreement. Then he wouldn't be faced with two vacancies at the start. Depending on his management style, he may find the tenants choose to move-out on their own if he establishes new property rules that they don't like. That's what we did with an 8-plex we bought. Some of the less desirable tenants chose to move out quietly, on their own, once they saw our new rental agreement and saw we would enforce it. Some chose to change their ways and became good tenants. We got the outcome we wanted without needing to terminate anyone's rental agreement.
@Marcia Maynard - I'm surprised you didn't know about this:
"By Daniel Beekman Seattle Times staff reporter
"Seattle is apparently breaking new ground by requiring landlords in the city to rent their housing units on a first-come, first-served basis."
"The Seattle Office of Civil Rights (SOCR) will begin work on how to implement and enforce it"
"Prospective renters will also have the option to sue a landlord"
Usually when the SOCR gets involved, it gets very very expensive to the Landlord to try and keep their property. Seems like the balance is in favor of the Tenant. That is PRIVATE property the City is dictating that has to go to someone the Landlord may not want. Since the prospective tenants can sue, and there are plenty of lawyers waiting to take the cases, this should be fun for the Landlords right?
As goes Seattle, so goes Washington. I stand by my original comments.
Ken
Ken, I know more about it than you give me credit for. I follow what the Tenants Union is doing in Seattle/King County, even though I live in the south part of the state. I'm actively involved in our local/state landlord associations and lobbying efforts. This is nothing new. Don't count on so goes Seattle, so goes Washington. The state senators and state representatives have supported landlords much more than it may seem by what you see happening in Seattle. There is a different history there, including some serious discrimination and abuse by landlords. I used to live in Seattle and saw it first hand; some of the measures are warranted. But we are a large and diverse state and the laws are not one size fits all. The key is in establishing good rental criteria and not discriminating against protected classes. No different than elsewhere.
Marcia
Landlords have the right to inspect simply by giving proper notice as outlined in your state landlord tenant regulations. It is not necessary to put it in the lease.
This brings up a very important point. If you are looking to invest in rentals you should have first learned all the state codes governing your future business BEFORE you purchase. You need to know and understand ALL landlord tenant laws before you invest.
Learning the state codes is a major part of educating yourself on income property investing. It appears you missed that lesson.
Nam Tran,
I have a section in my lease that says- I may enter the property at anytime with a 24 hour notice and anytime that is deemed emergency with no notice. If I think there may be a problem I just send them a message and tell them when Ill be over. Every other month inspection seem extreme and may deter future tenants- ie: privacy. It might be a better idea to come up with ligament reasons to check the property such as scheduled repairs. ie: yearly furnace cleans on one date. replace the batteries in the smoke alarms on another trip, and one yearly apartment inspection for damages. The tenant will feel like you care about your property and are interest in keeping up with repairs. ect.. I typically do weekly drive and inspect the yards. I dispose of anything left around and sometimes put the garbage by the road on pick up day ( I pay for the garbage- and its the tenants responsibility to have it at the curb)