Becoming a first time Landlord in Wisconsin with property purchas
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@Tracy C. A few questions first. 1. Is the home being rented at market value? 2. Are you happy with the property management services? 3. Have you read the contract in place already? Lets assume that you are not happy with the property management service and it's below market value and there is no issues with the contract in place. Then there are a few things you need to do after you have a copy of the lease contract and landlord agreement (the contract between the owner and the property manager). There is likely notices that have to be given for both most likely 30 days for the tenant and 60 days for the property management company. Often especially with month to month leases there is a first, last, and sometimes security deposit collected. If this is the case you need to know before you close who holds these funds. Often times will be the property manager but not always, and you need to know what amounts. The property manager should be able to give you the move-in inspection. With all that being said if it's not already been agreed you will likely be legally obligated to honor the property management contract and the tenant contract until you notify them or intent to terminate or terminate and resign under more favorable terms for yourself. Congrats on the purchase, just make sure you have covered your bases with the seller and if you need help and don't want to use the same property manager I would recommend finding one you believe will represent you and your new asset well. They can advice you on what you will need to know and obtain prior to closing. It's unfortunately all to often information is restricted once a relationship is severed or is known that it will be. This is why prior to close and notifying the current PM and Tenant it is important to get all the information you will need.
6 Replies
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes6y
@Tracy C. the lease survives the sale of the property. So if it has not been terminated yet, either party can terminate it in September and depending on how it is written most likly will then end 10/30.
Best practice would be to provide a letter to the tenant at the day of closing to introduce yourself, provide contact information, rent payment instructions, general instructions and if you want, your intentions for the new lease.
There are several good FB groups in Milwaukee. Where is your property?
@Tracy C. A few questions first. 1. Is the home being rented at market value? 2. Are you happy with the property management services? 3. Have you read the contract in place already? Lets assume that you are not happy with the property management service and it's below market value and there is no issues with the contract in place. Then there are a few things you need to do after you have a copy of the lease contract and landlord agreement (the contract between the owner and the property manager). There is likely notices that have to be given for both most likely 30 days for the tenant and 60 days for the property management company. Often especially with month to month leases there is a first, last, and sometimes security deposit collected. If this is the case you need to know before you close who holds these funds. Often times will be the property manager but not always, and you need to know what amounts. The property manager should be able to give you the move-in inspection. With all that being said if it's not already been agreed you will likely be legally obligated to honor the property management contract and the tenant contract until you notify them or intent to terminate or terminate and resign under more favorable terms for yourself. Congrats on the purchase, just make sure you have covered your bases with the seller and if you need help and don't want to use the same property manager I would recommend finding one you believe will represent you and your new asset well. They can advice you on what you will need to know and obtain prior to closing. It's unfortunately all to often information is restricted once a relationship is severed or is known that it will be. This is why prior to close and notifying the current PM and Tenant it is important to get all the information you will need.
Originally posted by @Marcus Auerbach:
@Tracy C. the lease survives the sale of the property. So if it has not been terminated yet, either party can terminate it in September and depending on how it is written most likly will then end 10/30.
Best practice would be to provide a letter to the tenant at the day of closing to introduce yourself, provide contact information, rent payment instructions, general instructions and if you want, your intentions for the new lease.
There are several good FB groups in Milwaukee. Where is your property?
Oh so I have to deal with the management company until 10/30/2020? I thought the seller would be able to terminate them for me and I would work direct with the tenant starting on 9/1/2020.
So I can't contact the tenant until 9/1/2020 right?I'm in Green Bay.
Originally posted by @Devin D.:
@Tracy C. A few questions first. 1. Is the home being rented at market value? 2. Are you happy with the property management services? 3. Have you read the contract in place already? Lets assume that you are not happy with the property management service and it's below market value and there is no issues with the contract in place. Then there are a few things you need to do after you have a copy of the lease contract and landlord agreement (the contract between the owner and the property manager). There is likely notices that have to be given for both most likely 30 days for the tenant and 60 days for the property management company. Often especially with month to month leases there is a first, last, and sometimes security deposit collected. If this is the case you need to know before you close who holds these funds. Often times will be the property manager but not always, and you need to know what amounts. The property manager should be able to give you the move-in inspection. With all that being said if it's not already been agreed you will likely be legally obligated to honor the property management contract and the tenant contract until you notify them or intent to terminate or terminate and resign under more favorable terms for yourself. Congrats on the purchase, just make sure you have covered your bases with the seller and if you need help and don't want to use the same property manager I would recommend finding one you believe will represent you and your new asset well. They can advice you on what you will need to know and obtain prior to closing. It's unfortunately all to often information is restricted once a relationship is severed or is known that it will be. This is why prior to close and notifying the current PM and Tenant it is important to get all the information you will need.
Right now we are waiting to receive a copy of the current lease from the property management company. I would like to keep the tenant and I'm ok with the amount of rent they are paying. I just want to work direct with the tenant and not use a property manager. Hopefully I can work things out to work direct with the tenant as quickly as possible after closing. I actually the seller could take care of releasing the management company. I have been told the tenants do want to stay. They had been there since 4/1/2019. They decided not to sign a new lease on 4/1/2020 and have been just month to month. I would like to see if I can get the tenants to sign a 6 month lease but if not I'm ok with month to month.
- Rental Property Investor · Oconomowoc, WI · Member since 2016 · 996 posts · 432 votes6y
You have no obligation with PM company for notification or anything. Their ability to claim "management" for the property ends the owner transfers their ownership rights to you. The contract is with the current owner and not with the property. It is between you and the seller if they okay you to contact the tenants directly about the leasing matter prior to the closing. If the seller has a realtor, its less likely any contact like that would be permitted. (Nothing against realtors, but many of them find it offers too many complications to have that line of communication open.)
You can't issue a lease for a property you don't own yet so I'm not sure there is much point in attempting to contact the tenant before hand. You can ask the seller to let the tenant know you are interested in keeping them on.
- 6yCalvin OzanickBusiness MemberProperty Manager · Janesville, WI · Member since 2017 · 708 posts · 297 votes
I would say to always refer to the lease. I would also tend to recommend a professional PM to work through a lot of this. Also, you are best off using BP to attend local meetups to meet people who can share further information to help you out with this.
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