New investor seeking advice on property management...............
Hi all,
I will be closing on my first duplex in the coming weeks and am looking for some advice. My wife and I will be house hacking this property and will be managing the other apartment.
Currently the property is occupied on both sides and managed by a well known property management company.
We have given one tenant his 30 days notice who is happy to leave but we haven't yet contacted the tenant on the other side who has been there for three years that we wish to keep.
I have been told that the current property management company will need to transfer the existing security deposits over to us which makes sense. Will they also send the current lease agreements, condition reports, or any other information?
There is significant damage to the apartment which will be vacated. In this case, are we entitled to use the security deposit to make repairs?
The tenant that we wish to keep will be on a six month lease if they agree to it. Should we treat them as a brand new applicant and make them complete the application and screening process or just keep it to a minimum?
Thanks in advance
Matt.
Quote from @Matt Robinson:
Hi all,
I will be closing on my first duplex in the coming weeks and am looking for some advice. My wife and I will be house hacking this property and will be managing the other apartment.
Currently the property is occupied on both sides and managed by a well known property management company.
We have given one tenant his 30 days notice who is happy to leave but we haven't yet contacted the tenant on the other side who has been there for three years that we wish to keep.
I have been told that the current property management company will need to transfer the existing security deposits over to us which makes sense. Will they also send the current lease agreements, condition reports, or any other information?
There is significant damage to the apartment which will be vacated. In this case, are we entitled to use the security deposit to make repairs?
The tenant that we wish to keep will be on a six month lease if they agree to it. Should we treat them as a brand new applicant and make them complete the application and screening process or just keep it to a minimum?
Thanks in advance
Matt.
Hi Matt,
Congratulations on this property!
1) They should send you over all of that information, if not make sure you ask. You could always send them a turning-over check-out list. Write down everything you need from them before their contract is up so it is clear.
2) Was the property in that condition beforehand? What does the property management company say. Was it previously like that and they just did not fix it or did the tenant do it? If it was caused by them then yes of course you can.
3) If they already have a written lease then you do not need to make a new one/do all that screening and I do not believe you can even do a new one until that lease is up.
Thanks for that Steven, very much appreciated.
#2 Managing Your Property Contributor
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#2 Managing Your Property Contributor
- Property Manager
- Royal Oak, MI
1) Documents - you should have required these at the closing. Once closing is done, seller and PMC are not required to provide you with anything. They might still do it out of professionalism, but we would charge a fee for the time and effort.
2) Security Deposit - Why are you asking such a basic question, yet terminating the current PMC? That's like firing the pilt and kicking him out with a parachute, then asking someone how to fly the plane yourself.
3) Lease - Again, a basic question you should already know the answer to.
Highly recommend you buy and read some of the management books here on BiggerPockets.
Of course, you can also keep doing it your way of learning on the fly and asking strangers for advice, hoping you don't make any critical mistakes.
Quote from @Matt Robinson:
Assumptions are dangerous, my friend.
You should contact the PM with a list of what needs to be transferred: security deposit, prepaid funds, application, lease agreement, spare keys or codes, etc. Anything that belongs to the property should come to you. The PM can keep copies for his records.
As for the tenant damage, I would have required the PM to deal wtih that before transferring responsibility back to me. Since it's too late, you'll need to determine what damage the tenant is responsible for and charge them accordingly. That's tough to do without PM involvment.
The tenant you want to keep can stay on a month-to-month lease. If all goes well, you let them stay for five months then give them a 30-day notice to vacate by the end of month six. If things go south, you can give them 30 days notice and get rid of them. There's no point in screening because they are a known entity and it's only for six months.
If it were me and you like the tenants I would just check the property to make sure they are taking care of it properly and that they are current on payments. If they are doing those two things and willing to pay market rent why rock the boat? If they moved out you would most like to occur some kind of expense to get the same tenant you already had.