My husband and I are about to close on our first rental property in Lehi, Utah! We decided to honor the current lease, which is up June 2018, and now we are trying to figure out what to do next. We are out of state and plan to be the landlords (not using a rental management company) until the lease is up next year. I have one specific question, and then welcome any additional advice or look-outs!
The current landlord is the real estate company that reps the seller. They said this: "With other deals I have done in my rental department we just use the lease agreement that is given to us buy the seller or current owner. But we let the tenants know the money comes to us now. Thats what i would suggest to the buyer." To me, this sounds shady if it's not in writing somewhere. I would assume we should resign with our own contract with the current tenants, and just copy over the current agreement parameters?
Additionally, since we are out of state, I was planning on asking for this additional information, but it seems a little invasive. Not sure what is necessary and what's a nice-to-have?
- Tenant contact information (& emergency contact)
- Spouse or co-tenant contact information
- Description of pets and deposit paid, if any
- Auto make, model and license number
- Driver’s license number and social security number
- Place of work and employer contact information
- Income from employment and all other sources of income
- Rent payment made upon signing of lease
- Last month’s rent paid in advance, if any
- Confirmation that rent is current
- Amount of rental deposit, if any (include all refundable deposits)
- Copy of current lease
- Verification of ownership of all furnishings (drapes, appliances, etc.)
Thanks in advance, BP fam!
You are required to follow the current lease. You can not make them sign a new lease with you even if you copy over the terms from their current lease. You should ask for a copy of their current lease which should contain most of the information that you are asking for.
Just trying to be honest but if someone asked me to verify that I owned drapes id be pretty pissed off. I did have a renter who moved out with a lot of appliances and it was unclear if I bought those with the house or not, so I suppose there is a balance. I guess I would advise to tread a bit lightly and not make any major waves as turnover is a killer especially if they are good people.
I guess this would be a lesson learned for you. All of the information you are requesting should have been received. From the seller, and an estoppel agreement signed by the tenants confirming the information
When we bought a property with inherited tenants, we received copies of the existing leases, which showed security deposits paid, lease terms (date when expired) and rent amount. We sent the tenants a new owner letter introducing ourselves, giving our contact information and that we would be meeting with the tenants and explaining our rental agreement within two weeks. (Per Idaho State law, the seller was supposed to inform the tenants of the sale of the building, but they did not.) We met with each of the tenants and inspected the property making a list of deferred maintenance. For our tenants on leases, we used our lease, with our rules, but kept the rent amount and lease terms the same. Everyone signed without an issue.
WOW, OK you obviously have no idea what you have gotten yourself into.
First thing you need to do is sit down and learn all the state landlord tenant regulations pertaining to the state you are investing in. You are now operating a business and must know and follow all the regulations.
Do nothing until you have learned the regulations governing your business and do not act on the advice of anyone else until you do know the codes.
Advice from investors not familiar with the specific state can be misleading if not down right wrong.
You know own a business and if you do not wish to end up being taken to court by a tenant you need to ramp up immediately. Being a new landlord is a very steep learning curve if, as in your case, you have done zero preparation in advance.
Luck is useless...get learning asap.
You definitely should have some of that information. I've always found that getting an estoppel letter signed by both the tenant and the seller is the best way to gather most of that information. Sadly, many realtors who sell/represent buyers in rented property have no idea what an estoppel agreement is. That's unfortunate. I want more than what the Seller represents to me, I want the signature of the tenant saying agreeing as to what the deposit is, who owns the appliances, the tenants names and contact information, etc. You need to get that ASAP. Prior to closing. I then also write a letter to the tenants and have it delivered the day of closing giving them new payment information, contact information, etc. I also summarize the information from the estoppel letter (this is my understanding of the term of your lease, security deposit, when rent is due, etc.).
Here is a copy of what I use. You can obviously modify it to ask for make and model of vehicles. Full name of all occupants, etc.
I've found this EXTREMELY helpful. Regardless of whether or not there is a written lease.
This Estoppel Agreement is used to protect everyone’s interests when an apartment building is sold. This agreement allows the tenants to tell the new buyer what their written and verbal rental agreements are with their current landlord. This will prevent any misunderstanding about your rent payments, security deposits, and lease terms.
1. Tenant Name(s): ________________________________________________________________________
Address and apartment number: ___________________________________________________________
2. I signed a written lease for this apartment. YES or NO (circle one), OR
I only have a verbal lease for this apartment.. YES or NO (circle one)
3. My lease began on _____/______/_______(date). My current lease ends on _____/_____/____(date).
Currently my lease is month-to-month YES or NO (circle one)
4. My rent is $______________per month or week (circle one) and is due on ____________________.
5. I have paid a security deposit. YES or NO (circle one) The deposit amount is $ ______________.
6. My most recent rent payment was made on ____________, 20_____ for the amount of $_______________
7. I am responsible for paying these utilities :________________________________(Write "none" if applicable)
8. Any other deposits or pre-payments are as follows____________________________________________ (Write "none" if applicable)
9. The appliances I own are:_________________________________________. (Write "none" if applicable)
10. The legal names of all people living in this apartment are:________________________________________
11. I have a pet. Yes or No (circle one) How many? _______ What breeds? ___________________________
12. Other written or verbal agreements I have with the landlord are: (Write "none" if applicable.)_____________
13. Any problems related to my tenancy or any repairs that are needed are: (Write "none" if applicable.)
Signed by tenant ____________________________________________ Date: ____________
Signed by tenant _____________________________________________ Date: ____________
I have reviewed the answers given above and agree with the tenant’s statements regarding their payments, agreements and deposits.
Owner: _____________________________________________ Date: ___________
Congratulations on taking the leap! Being your first investment, you must have picked this specific city in Utah for a good reason. Now you will need to - if you already haven't - understand everything about the laws governing your rental property.
Jumping right into the issue, I think it is pivotal for you to have all your questions answered before you close escrow.
Typically, a lot of what you need to know about you tenant(s) is accessible via an E stopple and your lease agreement - if you do not have these, attain them immediately. If what you are looking for isn't avaible in the content, you should make it the sellers responsibility to provide all necessary information before you close escrow. Failing to do so may be costly in one form or another.
I suggest you ask all your questions here, educate yourself and speak to the sellers team as soon as possible.
To your success!
I would highly recommend partnering with a top notch property management company ASAP to oversee this property. Take your time to interview various companies and pick the right one for you. This will save you headaches and keep your investment on the right track.
Good afternoon Jessica,
First things first, congrats on closing on your first rental property! That's so exciting!
Now, to address your concerns regarding the current tenant, here are a few things to remember. If the tenant is currently in a lease with the previous owner, you have a legal obligation to abide by that lease until expiration. The only time this would not be the case would have been if the owner negotiated the tenant to break the contract/lease prior to closing on the property.
My suggestion would be to send the tenants a "Welcome" letter introducing yourself as the new owner and providing them with any contact information for you going forward. In addition, you should include a 'Tenant Information Update' form that the tenant should fill out and send back to you so that you have all of their updated information as well. The Tenant Information Update letter template can be found on EZlandlordforms.com.
Prior to closing, you should always have the current owner provide you with the current rental agreement, the tenant's rental application, (along with copies of driver's license, social security cards and pay statements, if applicable) and a statement of rent paid. Try to get as much information as you can from the owner.
Once the lease is up, you are free to create your own agreement going forward or to even get a new tenant if you see fit.
I hope that helps!
Thanks everyone for your advice and direction! Being our first rental property, and first time being a landlord, we are extremely grateful for all of the direction!
You have to honor the lease that is in place....you can't legally alter it until that lease expires...so you had better get a copy of that before you close..
What area of Lehi are you buying? Is it a new construction?
Originally posted by @Joe Au :
What area of Lehi are you buying? Is it a new construction?
It's not brand new, but a newer development near Thanksgiving Point! What are your thoughts on that area?
There is a lot of development in that area. Point of the mountain is great because it's in between Sale Lake County and Utah County. And people can commute north or south for work. If you can cash flow with that property, you are doing pretty good.
@Jessica Chow Utah real estate law requires you to honor the lease that is already in place, you should already have a copy of that as well as a copy from the sellers of the deposit, application (which would have a lot of the info you wanted) as well as rent roles etc. If the renter agrees you can sign a new lease with them but you can't force them to. You will be able to prove you own the property once you close and can show proof, the owner or agent could also schedule a three way call to introduce you to your new tenants and have the old owner let them know you're the person who will be collecting rent. I live 5 minutes from Lehi and have two rentals there and it's an awesome area, I'm buying my third there right now. Let me know if I can help answer questions, I've been buying and selling as an investor and realtor here for the last 7 years. Good luck!
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