I will be closing on a duplex in December. I have inherited tenants with no leases. How should I start the process without scaring off the tenants. They pay about avg Rent they take dissent care off their units. I will be making upgrades and want to protect my asset. I do not know if it fair to have them pay a deposit for a new lease. Any suggestions would help. Thanks James
Yes, they should sign a new lease. It should be a lease you are familiar with and that addresses your concerns.
Yes, they should be required to pay a deposit. If they do not have one, make them pay one (in full) on the day they sign the lease. If they refuse, they should move out so you can find a tenant that will pay.
@Nathan G. Thanks for the advice!
@Cameron Tope Thanks sir!
First of all, you should be getting an estoppel certificate, signed by seller and tenant, that outlines current rent, current deposit (even if its $0), and any current outstanding oral agreements. Without that, the tenant can claim the old landlord was holding a deposit (and now you are responsible to return it) or that he prepaid rent for the next 5 years and it isn't his problem the old landlord didn't tell you.
Next, you want to get this tenant on a written lease ASAP. Many landlords prefer yearly leases, but for inherited tenants you should put them on a month to month, always., This is because you have not had the opportunity to screen the tenant and make sure they are good tenants.
You will have to follow your state laws when you give them notice that they must sign the new lease or vacate. This is probably 30 days notice, but can be 60 depending on your state. You should take this time to learn your local landlord/tenant laws, as they govern your business and will dictate much of what you do.
As far as rent goes, you will want to get them within the range of market rent as quickly as reasonably possible. How quickly you do that will be determined by your rental market and your ability to carry the property. If you have a large cash reserve, go up to market rent immediately (or a small percentage under if your unit is outdated). If they balk and leave, you can rent it to someone new at a higher rate. If you have a smaller reserve, give them a month to adjust to new ownership, then go up to market rent. Some recommend doing it slowly over several years, but all you do is delay the inevitable and give away money every month.
@Andrew B. Thanks sir
It depends. If they're already on a lease, then you have to honor it. If they've already paid a deposit on the lease they already have, then you can't ask for more.
If they're on a month to month, you need to find out how much notice you need to give them to raise the rent or change the terms of the agreement they currently have in place. And, in that case, you can usually just give them a notice telling them of new terms.
A deposit is basically insurance paid by a new tenant to cover you in case they don't pay rent or cause damage. If these tenants haven't been paying rent late or causing damage, asking them for more deposit money isn't really necessary and you may just frighten them off.
If you want to get rid of them, just give them the proper notice. Otherwise, why make good tenants want to leave?
I think landlords often forget that tenants are people or they just get carried away with wanting to take care of all of the legal issues that they forget that the tenants have the right to just move out if you get too stern with them. This is assuming they're good tenants. But, if they're bad tenants, as I say, just give them notice and get rid of them.