What to do with inherited tenants?

Question

Hi everyone!

I am buying my first investment property in the next months and the duplex is fully rented. I have talked with the tenants and they seem like good minded people. Do you guys have any tips on how to manage inherited tenants to avoid unwanted problems. Do you send out different forms, letters, etc?

Thanks for all you help!

Kyle Scelza · Answer

Congrats on your first rental property Felix. What I have found works best is not trying to completely rock the boat when you first come in. Buying the duplex I assume is a long term investment, keeping good tenants will be in your best interest. Use this time to walk through each unit and see if there is anything that needs repaired/fixed. This will show you have their best interest in mind. If rents are low and you plan to bring them up to market rent be upfront with them but also be considerate. Gradually increase rents if it is a large increase that is needed. These two tactics have helped keep my inherited tenants happy and I'd like to think is some of the reason they have renewed the lease with me. Best of luck on your real estate journey, enjoy the process.

Jasmine Delves · Answer

I agree with the above advice. The most important thing is just to keep communication open from the very beginning so you can establish a good rapport. That way, they will know you're reliable and approachable.

Andy Webb · Answer

Be sure to do a search on this site for an Estoppel agreement or form.  There is a good write up as to why you want to use one and document certain things in the property for the hand over. Proper documentation will help ensure smooth operations.

Nathan Gesner · Answer

After closing, present them with an introduction letter, preferably delivered personally. Let them know you are the new owner, how they can/should contact you for maintenance or other issues, tell them how they can pay, and set some basic boundaries (e.g. only call/text if it's an emergency).

I recommend keeping them on month-to-month leases for 3-6 months while you get your footing and see how they are as tenants. If they're really good, you'll want to keep them. If there's even a hint of problems, you should consider starting fresh.

As for rent, I only keep tenants below market if they are excellent renters in every way. If they are less than ideal, I would prefer to get rid of them and place my own tenant at market rate. If it's a big increase, 20% or more, I wouldn't even bother trying to raise the current tenants because they either won't be able to afford it or they'll resent you for making their life miserable. I also do not believe in "gradual" increases because it's more likely to cause confusion and animosity. It's best to start with a fresh tenant at market rate.

Matt Ziegler · Answer

Felix,

Be respectful, friendly and firm. When do the leases run out? Have you reviewed the current leases?

When time comes to renew , provide clear rental criteria, follow all the local and federal laws, treat this like the business it is. Treat folks the way you would want to be treated, be friendly, but not friends with your residents. If you plan on self managing, learn as much as you can about RE managing.

Congrats and good luck

What to do with inherited tenants?

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