New landlord and possible tenant situation already! Advice please

47 Replies

I'm a new landlord, haven't even collected first rent from tenants yet on a 3 unit in a city of about 100k population. Neighborhood is rough in an ethnically diverse section, but property price and rents seemed good. Second floor tenant, who lost her lasts months rent because old landlord used it when she was behind, seems to have invited other people to live in the apartment when she found out there was a new landlord. Got this Info from first floor tenant. She already lives with her girlfriend. 

New tenants are not authorized unless they go through me with an application. How should I go about this?

Should I wait to see if they at least pay their rent? I am assuming she needed help with the rent. But I don't like the fact that she brought someone in without asking me.  I am doing property management myself or thought I was going to. But its stuff like this that makes me want to hire a PM co to deal with that type of BS.

Oh and I know they smoke pot in the house because last time I was there, I smelt it. 

@Stephen Neto sorry and been here before myself. Do not be overly nice as it does not work. Enforce your rental agreement you inherited and follow this closely. Unapproved tenants and smoking pot I am assuming is not approved in your paperwork. I failed to endorse with past tenant and just hoping they will pay and being hopeful is not enough. Post on their door and serve them accordingly, and do this promptly. You will be happier in the end, trust me.

Start the eviction process.

She was already problematic and got behind on rent with the last Landlord. You also know she's smoking in the unit (doesn't matter if it's a legal substance or not; smoking shouldn't be allowed indoors). 

Hit her with an eviction and minimize the losses now.

I agree with both @Todd Powell and @Nathan G. Since this would be my first eviction, what are the actual steps I should be taking to cover myself. Are there state specific forms for this or can I find something here on bigger pockets?

Eviction may indeed be the best option, but first verify if what you perceive is actually occurring. I wouldn't rely solely on the word of another tenant.  Find yourself a local mentor too. I understand Massachuetts can be a difficult place for landlords because of laws that are highly favorable to tenants.

Review the lease/rental agreements that the tenants currently have. If you have the ability to talk with the previous owner, do so. Hopefully you received all of the tenant security deposits at the closing, because whether you did or did not, you will be liable for them. I suppose that would be true for last month's rent too. You need to know who paid what and where the money went. Were you lucky enough to get the the rent register and tenant payment history from the previous owner? If the tenants are required to pay for any of their own utilities, now is the time to call the utility companies and verify the payment history of those accounts as well. Tenants typically will default in paying utilities before they default in paying rent.

Introduce yourself and your management style as soon as you can. You need to make a connection with each household and communicate clearly what they can expect during the transition to new ownership. This is a chance for you to establish a good landlord-tenant relationship. Transition all tenants over to your own rental agreement as soon as you can.

Inspect each unit by giving proper notice to enter. You need to establish a baseline for the condition of each unit at the time of purchase. Also, this will give you an opportunity to address deferred maintenance. Safety items should be of top priority. Also, it's imperative to check all plumbing and electrical, including smoke/CO detectors.  While you're in each unit, take note if you spot any violations to the rental agreement.

Good luck!

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@Stephen Neto Drug use, tenants moving people in and out, paying rent when they feel like it, etc.. are all hallmarks of owning rentals in low income areas. Your paper numbers will be higher with these properties like you outlined but you will earn every penny managing them and you just hope your paper returns are close to the returns you get in real life. 

When hiring management make sure to thoroughly vet the management company before selecting one. Very few good property managers want to deal with the low income areas for the same reason owners don't. They are a major drain on time and resources. 

As far as the tenant in question I would evict. 

@Stephen Neto Look at the link @Nathan G. provided.  Then look at this one:

https://www.mass.gov/info-details/massachusetts-la...

Massachusetts is very strict when it comes to landlords.  A "professional" tenant can tie you up in court for the best part of a year, especially if you make even a tiny procedural mistake.

Chapter 93A (the Consumer Protection Act) also applies to landlords and can award a plaintiff up to 3 X damages.

I don't disagree that you should at least start the eviction process, but I'd knock on the door and confront her, in a professional way, obviously. You don't have any proof that she has moved another person in, and just because you smelled them smoking doesn't mean that would hold up in court. You should push forward on the late rent, that's concrete, easy to prove. 

That said, I would definitely not hire a PM- this is exactly the type of seasoning a new investor needs. As an investor, you have to "manage" any PM that you hire, but that's really difficult unless you've done that job for a little while. Many investors have great PMs, but don't know it because they want to nitpick the details without knowing what that job is like. Other investors have terrible PMs. but don't know it because they don't have experience. You don't have to be a PM forever, but get through some tough situations with tenants so that you can manage your relationship with your future PM in a meaningful way. Best of luck!

Thank you for all the great advice.  It is my understanding that if I have a relative that is looking for a place to live, I have a good chance of evicting a current tenant more easily to provide housing for a family member.  I don't know if this is a Massachusetts thing but does this sound correct?

@Stephen Neto .  Congrats on your property! I had a similar situation last year when I purchased my first multi family.  I had 2 units behind on rent and smoked in the units.  I confronted each of the tenants about this (one had been there for 18 years).  My plan was to use an attorney to go through the eviction process, but each tenant decided to move on, so it was about 4 weeks of challenges with them. Maybe you can hire an attorney to get you through this first eviction while you're still learning.

@Stephen Neto Let me start out by saying that managing your own properties starting out is the way to go. You must know the laws and what you can and can't do. If you don't understand property management, you won't know how to hire a company or if they're doing a good job. I'm quite confident when I say that most property management companies are horrible.

Now, to the problem at hand. When you bought the property, you should have received deposits and contracts from the previous owner. If you didn't, you started out wrong.

You are legally bound to uphold any contract and terms that the tenants have. Consumer protection laws see to that. If there is no contract, send all tenants your own new contracts. They are allowed to sign or move.

From your explanation, the tenant "seems to have invited other people" means you don't know if they already have permission to be there. Any permission for occupancy must be in writing so, again, refer to the contract.

If there is no contract, send new ones immediately. Then you will be managing your property according to your terms. Back to the property management company scenario - they manage based on your paperwork and your rules. I owned a PM company and most owners came in with their own contracts and rules. Some allowed pets - some didn't; some allowed smoking - some didn't etc., etc. What you do with your property is up to you - the PM company enforces your rules (if the company is any good...).

It all goes back to the contracts. And your local laws. Every state is different. When any tenant is "bad" including behind in payments, I start eviction IMMEDIATELY. This is a business. I listen compassionately to their reasons, but the rules are the rules and I don't bend them for any because, if you give in to one, you must give in to all (consumer protection laws, again).

Owning a property and managing tenants are 2 very different businesses. You must learn property management if you're going to have tenants. I wrote a book - The Essential Handbook for Landlords - on Amazon which is a great starting point.

You own it - you're in charge. You need good contracts and to learn local laws and how to manage.

Good luck to you and please keep us posted!

Sounds lIke some real wInners ! Watch that the violations you cite in the eviction have to do with the drug use and unauthorized new tenants living there and not due to thespian concerns .c and d class neighborhoods are great places to make cash flow but unfortunately the tenants are usually low functioning “ unIque “ people and I can say that because that’s where I invest

Previous landlord did not do much to improve the property. He did even have rent rolls or any agreements. So I am starting from scratch.  That helps me lay down the new laws. Seems like eviction is the only path to go for this tenant, just want to go about it the right way before I start putting in money for improvements.

Updated 4 months ago

I meant to say previous landlord did not have rent rolls or agreements in place.

@Stephen Neto Maybe I skimmed over it, but do these tenants have a lease, or are they month-to-month?  If they have a lease things are a lot more difficult.

I have never heard of an easier eviction for moving family in, but it could be true.

At this point, you might want to pay for an hour of time with a local attorney who has eviction experience.  It's way too easy to make mistakes that will cost you in court.

@Stephen Neto - My advice is similar, I would look over the lease and begin the eviction process as soon as possible. I had a tenant who was unable to pay second months rent, I started the process that month. In this case after communicating to her the damage a eviction would be to her credit, she agreed to pay me 80% of what was owed and move out by a specified time I gave her. She did this and within two weeks I turned it around and had another person renting it. I was firm and I made sure I followed the law here in MO. If a person is late once, typically they will try to be late again, don’t be “nice”. She originally asked if she could stay longer because of her new situation, I explained to her (some won’t care) how I’m loosing money. I did the math, seriously for her. Then I asked, would you leave that amount of money on the table? No, I need you OUT!. She left but still, they will try you. Best of luck.
@Kizzy Robb That’s an interesting approach I like that . I’ll have to remember your strategy

Let's rephrase something, she didn't "lose" her last month's rent, she is already BEHIND one month compared to all your other tenants.  

Maybe have a discussion that you are afraid she can't afford the rent, and you are considering giving her notice because of this (this nips off the "I'm a bit short" excuses)  along what would be necessary for you to be comfortable allowing her to remain as a tenant (catch up on the behind rent, maybe over 3 months period  AND all occupants PASS background check) . 2-3 working adults SHOULD be able to come up with the rent -- I don't imagine that you are gouging anyone.

It is possible that if there is a wide open door in front (no 30 notice required if you move in the next 45 days!) and nothing but the extra expenses (catching up on the back rent) & "unreasonable" rules (no pot, no smoking, & no extra people) she might chose to leave.

BTW, everyone uses the word "eviction". It's only an eviction if the courts force the tenants out. If you give them notice and they leave (or if they give you notice and leave) it's just normal business, not an eviction. Rent control changes everything of course.

@Karen Rittenhouse what kind of exceptions would you make to some of the lease terms that’s not against the consumer protection laws? I mean there would have to be some situations where you have to bend the rules.

@Stephen Neto

Stephen,

Congrats on the purchase.  Time to get to work!

1. Do they have a lease?
2. I understand the last month's rent was used  by the seller, but did they pay the rent for October? It does not matter if you received the rent or the seller (if seller, then you should of gotten a portion of the rent at closing).  Either way did they pay for October?

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Yes @Rich N. I got October rents from previous landlord at closing. So they are paid up. November 1st will be the test for me. But my gut is telling me this tenant could be a problem down the road.

@Account Closed this tenants rent is $750.  This one rental covers my mortgage payment.

@Stephen Neto

so, with October's rent, you can not move forward for eviction for non-payment. 

So, I asked earlier, do they have a lease? 

If they have a lease then you can try to evict base on a violation of the lease. Of course this has to be serious and with solid proof and a judge probably still won't allow unless its more life threatening, 

If they do not have a lease, then move forward by giving them a 30 days notice to quit ( a full month term) as you are not renewing because you have that relative that is going to move in.  This ha to be done before the 1st of the month.

If you want to wait for November to see if they pay the rent, then once they do not, on the 2nd, serve them a 14 day notice to quit for non-payment of rent.

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