Buying a property currently where going through the same thing.Fortunately for me, leases end 12/31/17.We close 1/2/18.Willing to keep one tenant, but the other has got to go.She was really a pain to deal with at inspection, would not let us in, despite having been notified of inspection by buyer multiple times.I had to put my foot down and request seller agent to provide access as I was not about to do a mediocre inspection because tenant would not let us in to complete inspection that I had paid for.In the end she let us in, 45 minutes later and tried to play nice but I was so fed up by then that the damage was done and I have no intention of taking on said tenant.With the tenant I am inheriting, I am however providing 30-day written notice both to vacate and of lease change based on change in ownership.As with you, the rents were way below market value and partly because previous owner somewhat neglected property.I intend to do some major overhaul to the property, and need to raise the rents slightly to account for the time and money that will be going into this.I also need inherited tenants to know about my lease terms as I will not be taking on anyone’s lease.If I am to inherit tenants, it will be on my terms.Tenants have the option to vacate or to agree to the provided lease terms which includes a slight increase in rents.My preference is for them to stay as they seem like good tenants, but at the end of the day, I cannot force them to stay.
Not sure at what point in the lease you are taking on these tenants and if you can use rent raises to try to see if leases can be broken.The other alternative is to inform them of plans for renovations and agree to pay them to vacate.Not preferred, but worth a try.Gives you all 4 units and you can then raise the rents as needed.That being said, see what your pockets can handle.I too hate inheriting tenants but I know that with this new property if I let both go, it will be tough for me especially at this time of the year.I would much rather let the troublesome one go and keep the others and then only have one vacancy than 2.Good luck.
Last year had a similar situation. Inherited a tenant who was a huge challenge for the previous owner. Met with the tenant explained to them that I needed to rehab the unit. I told them if they could move out in a week I would pay their moving expense. Worked out great. Everyone wins.
Personally, I try to stay away from getting litigious with tenants unless it's completely necessary. I would suggest making a deal with the tenant that incentivizes them to move and make sure to have them sign an addendum detailing the new agreement.
@Michael Vallee you must honor the lease terms that you inherited. One act of non-compliance on the tenant's part will not allow you to then unilaterally "break" their lease. If a tenant is not paying rent or are violating some other term of their lease, you would need to deliver a formal notice and start the eviction proceedings (5 day notice pay or quit, 5 day notice health/safety, 10 day notice of material non compliance). If they don't remedy the situation, then have an attorney start the eviction proceedings, which you can expect to take between 30-60 days in AZ.
Offer the tenants something of value if you want to mutually terminate their leases early. Think of it as a "cash for keys" scenario.
"How soon following any hint of Non compliance"
Legally you can not "break" a tenants lease (actually a tenant can break there lease a landlord however may not). It is a binding legal contract on both sides (in the tenants favour). You can possibly convince a tenant under lease to leave or, if they violate a lease, you can attempt to evict.
The process to remove a tenant in violation of their lease begins the day you are aware of the violation. As a example when a tenant does not pay rent owed by midnight on the day rent is due you may issue the pay or quit notice the next morning to begin the process. If the tenant, within the allotted notice time frame, corrects the lease violation this terminates the landlords ability to continue with the eviction.
To evict would require ongoing or repeated lease violations.
For those new investor/landlords if you do not bother to take the time to learn your state specific landlord tenant regulations you should not be dealing with tenants at all. Get yourself a PM before you end up in court.
Thank you! I appreciate the feedback and input, I've dealt with several tenants both in WA and AZ, but this scenario is new. I will see if there is any "standard" for cash for keys and the time it would take recoup it if I received market rent. I agree, not the litigious type, but will have my attorney review the leases when I get closer to closing....I just did a similar acquisition right around the corner, but those leases were loose and month to month, so that was an easier transition.
We shall see what I can come up with!