How to switch water from owner to tenants

Question

Recently purchased 3 properties, 4 units with inherited tenants.  The tenants are all on month to month leases.  Was wondering what is the best route on going and what documents I should provide when approaching the inherited tenants.  Trying to switch the water bill into their responsibility instead of mine.

Roland Jerez · Answer

@Julian Mills...I heard on a BP Podcast about a system called Ratio Utility Billing System used to bill tenants there fair share of utilities. Check it out.

Account Closed · Answer

Learn how to do it yourself and save the money.  With M2M, all you need to do is give them notice of your new terms, usually 30 days, not sure what it is in AZ.  Get a copy of the AZ landlord-tenant laws.

I wouldn't freak the tenants out unless you want them to leave right away.  I'd just at first send them a letter that says you're the new owner and rents should be sent to this address going forward.  Love, you.  Then, maybe just raise the rents a little - but if that can wait, they'll calm down.  Tenants are always really afraid when a new landlord takes over.  They're afraid of having to move, of having to pay more rent, etc.

If you need the water bill switched over asap, then just give them proper notice of that.  You could maybe just add that to your letter.  "And, starting on such and such date, tenants must have the water bill switched over into their name.  Please find the information on how to do that attached."  And then find out how it should be done with the water company.

But, basically, the most important thing for you to know is that with a M2M agreement already in place, you don't have to get them to sign anything new.  That's where things can get dicey - they procrastinate, you get frustrated.  They don't need to sign anything.  You don't need a lease.  If it's M2M, you just give them notice of what the new terms are.  Just send it with priority mail with tracking, to prove they got it - even if you also hand it to them in person.

If you want them to stay, though, take it slow.  Don't overwhelm them with contracts and new rules.  Let them calm down and get comfortable and make changes slowly, if possible.  Just try and think about how you'd want to be treated.  And if you just want to get rid of them, just give them the proper notice and start over with a new tenant.

Anthony Wick · Answer

@Julian Mills

To use or not to use a PM is a personal choice. Yes, you’ll save money. But, are you capable and have the time to self manage? I self manage. But I know I’ll be going to a PM probably within the next 3-5 years as I’ll be older and will not want the daily managing.

Just make sure you do research, and preferably get a reliable reference, for a quality PM.

Julian Mills · Answer

@Anthony Wick would you recommend a property manager to do this or if you only have 9 units to do it yourself?  Property Manager charges 10%, $50 initial set up fee, and $200 per new lease.  So from initial start will be paying $250 per unit open initial setup with the new property manager.

Kenneth Garrett · Answer

@Julian Mills

You should have received an estoppel certificate acknowledging the leases at closing.  It is signed by the tenants.  Definitely send a notice to the tenants or introduce yourself if possible. Changes to an existing lease are dictated by state or city statute.  In my state we must honor the terms of the lease.  We need to wait till terms expire before changes can be made.

Julian Mills · Answer

@Anthony Wick would you recommend a property manager to do this or if you only have 9 units to do it yourself?  Property Manager charges 10%, $50 initial set up fee, and $200 per new lease.  So from initial start will be paying $250 per unit open initial setup with the new property manager.

Anthony Wick · Answer

@Julian Mills. You should absolutely make contact, in writing, with tenants asap. First and foremost, they need to know where to send that April 1 rent. And they need to know who to contact if they have any problems. And then you'll want to get them all under your lease asap, which could require a 30-60 day notice in your state. Make sure you know your laws on notices and any rent increases. It also reassures the tenants that you will maintain status quo, or gives them notice of any changes you are going to make.

I also like to schedule a "move in" checklist with each unit. This essentially gives the tenant a chance to tell you of any deferred maintenance, and it gives you a chance to document what shape each unit is in so you know/can prove if the tenant has done any damage. Document with your checklist, and with pictures. And, if possible, have the tenant sign the checklist to acknowledge any damage (or lack of damage). Without this, at move out, they can merely claim; "it was like that when I moved in".

And, if you are self managing, be honest with your tenants. Don't tell them you're just the manager. If there will be a rent increase, be honest and tell them so they can decide if they will stay or not. If rent will remain the same, tell them that too, because they will be wondering.

Julian Mills · Answer

Also, when inheriting tenants should I introduce myself?  What are some documents along with a new lease should I provide the tenants?

How to switch water from owner to tenants

Most Popular Reply