Accountant · Baltimore, MD · Member since 2016 · 74 posts · 29 votes
I'll be closing on my first rental house - a college rental - in a few weeks. It is currently rented through next May. The house is about two hours away where my son goes to college. He will be living there after the current lease ends. Looking for advice on what I need to think about with the existing tenants as we take this property over.
I'll need a lawn service. The tenants pay all utilities, so I don't need to have them changed over. I have the phone numbers for the students and want to call each of them to introduce myself.
Should we do a new lease to clarify who the rent, etc., is due to? An addendum?
Nederland, TX · Member since 2016 · 109 posts · 92 votes
9y
@Tracey G. I have recently purchased a rented triplex. I had a very good seller and she was super helpful in letting me know what bills needed paid and giving me previous invoices for my records. One thing that I think you need to do is have the seller provide you the lease and a signed estoppel agreement from each tenant. The estoppel agreement basically has the tenant agree in writing with the owner as to their current lease terms. This can help avoid future "No, the deposit was this amount" type of conversations. The link below is what I used.
The leases stay in effect. The leases are assigned to you at closing and are still valid. At closing you are given a document indicating the property has been sold to you or your company. The document is notarized. When inheriting tenants try to avoid closing at the end of the month so everyone has ample time to transition to the new landlord. I prepare a letter regarding where payments are to be sent and who they are made out to. I will try to introduce myself if possible and hand them the letter, if not, I will post it on there door. If you use an ACH system for collecting rent you will need time to coordinate. You may need to physically collect rent the first month if you do not have enough time to set things up.
Great job on your first rental. I have student housing as well.
Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
9y
Tracey Geary Ryan Detig Tracey Ryan is spot on and while you are getting the estoppel agreement you should ask for a third party disclosure from the tenants. That's an agreement they sighn and that allows you to check to be sure gas and lites are turned on. Without that agreement the tenant can get behind in the gas or light bill and the utility company will turn the lights or gas off and you get no notification. I had one tenant put the gas in his name and not pay the bill. The gas was off from March until November. I didn't know it. This was in Colorado. The only thing that saved the place from freezing was he used the electric stove to heat the place. It cost me for a brand new stove when he did move out. The other thing you need with the utilities is called a land owner revert. Especially on the water. That is an agreement that as soon as a tenant shuts the utilities off the company automatically sends you the new bill. The utility company still will no talk to you while the utilities are in the tenants name unless you have the third party disclosure in place. You need all 3 papers for/from all tenants. I would recommend a PM unless you have prior rental expierence. RR
I obtained the leases before we signed the contract but I didn't think about obtaining an estoppel - I'm used to them in regards to commercial. Great idea and thanks for the sample.
Real Estate Agent · Sonoma, CA · Member since 2016 · 46 posts · 17 votes
9y
Hi @Tracey G. - I had the pleasure of inheriting tenants in a college town recently and it's good to read about the estoppel. I did not do that, but wow, good to know! Unfortunately, their current lease stays fully in effect so that's not too fun. I use a program now called Cozy.co for all rent payments (and tenant applications/screening when these current tenants move out). I LOVE this program, easy to use, no cost to the landlord. Anyway thought I'd share, but hang in there til they move - it's not ideal, but not forever!
Accountant · Baltimore, MD · Member since 2016 · 74 posts · 29 votes
9y
@Kristie
@Kristie Eddy Thanks for the suggestion on Cozy.co. I'll check it out. Not too worried about the current tenants because my son (who will be one of the tenants next year) coincidentally went to a party at the house we are buying and met and liked them. If they are like my son, we shouldn't have problems. It was a very small world thing - we sent him by to see the house and how surprised were we that he had been there just a few days before!
As far as the estoppel, I knew about them from the commercial side but not residential, so that was great info. My agent sent it over to their agent and they are in process right now. Better safe than sorry! Good luck with your inherited tenants.