All Forum Posts by: Courtney King

Great question! Anytime I or one of my clients acquires a property where the owner currently pays a utility that should be the tenants I ALWAYS come a up with a plan to change that. I'm speaking from experience in Texas so you may want to check your local laws but here's what I usually recommend:

1. Check the leases. You're only allowed to make changes like this once they are up for renewal or if they are month to month. 

2. If they are month to month or if their lease is about to expire you'll want to give them at least a 30-day notice before the change will take affect. If you renew the lease, be sure the renewal indicates that they will be responsible for utilities starting at a particular date. If you want to keep them month to month but still want them to now be responsible for a certain utility, as long as they get a written notice 30-days before the change you should be good. 

3. Metering - If there's only one meter, I suggest you use some sort of sub-metering system or another system that ensures your calculating this correctly. The property management platform that I use (I'm a Broker that uses a PM platform) has a utility billing system that allows me to bill back utilities to the tenants based on either number of occupants, sq ft, etc. In Texas on larger multi-family properties you actually have to register with the Public Utility Commission so you may want to check your state/local laws.

Last but not least, I make an effort to personally meet all tenants to introduce myself when I (or a client) buy a property. It makes the transition easier and you're able to establish a positive first impression so when you spring this on them shortly after they will be more receptive because you built that connection. 

Good luck! Congrats on this acquisition!

-Courtney

@Cindy Zhang I do work in Collin County as well. I may have a tri-plex coming up in Richardson. PM me your info and we'll connect.

@Michael Caine Great question! I get a ton of email blasts with off market deals. PM your contact info and I will forward some to you. I do have a new listing (in Garland) coming up (we're rehabbing now). Would be a great rental! I can send you the address and details. It should be complete in the next 2 weeks. Thanks for reaching out!

 Rental CO means Certificate of Occupancy. Some cities require city inspections before a tenant can occupy. It's not a big deal you just need to know what they are looking for. I've got a great relationship with Mesquite and Garland but new investors need to be aware of these requirements as some of the expenses can add up if you're not aware. If you're looking to buy a home in these areas, during the inspection of the home it's good for you to know what items will need to be addressed per city requirements so that you know what to negotiate in terms of repairs or a concession in lieu of repairs.

@Steven C. Suarez So sorry I missed it yesterday. Was tied up with a few buyers. Hope to attend the next one.

@Chad Harrison Let's chat about this too!

Yes it's the White Settlement location. I've been helping a lot of relocation clients find homes in the area!  Great post @Jeff Filali!

@Derrick Shannonhouse We manage properties in DFW and Houson. This is what I would do if it were my property or one that we manage. 

Complete the final accounting (There's a TAR form) which will include the accelerated rent and taking the deposit to offset the total. Be sure to send this within 30 days of when you take possession of the property. If you don't have a forwarding address, just mail it to the property and hopefully they have a mail forward and they will get it. If not, as long as you have it on file you should be fine.

Go ahead and do what you have to do to re-rent the property. Once you re-rent the property you'll need to adjust their charges so that the accelerated rent is only for the time between when they left and when the new tenant moves in. 

Once you have the new figure, I would send them a letter of the updated charges, give them some time (maybe 30 days) to pay. If they don't pay, put it on their credit report and keep it moving. I would not waste time or money on filing a small claims suit.

In the future, if they apply for another home or try to buy a house, they will have to clear that up. We use a company that does all of that and attempts to collect. It's not likely that you'll get any money immediately and it actually could take a few years but eventually it will catch up to them and they will have to pay.

The Spring market is so hot, I'd just focus on getting it re-rented and chalk it up to the game of real estate investing. Best wishes!