All Forum Posts by: Thomas S.

Give notice based on your state landlord tenant regulations prior to their leases ending. Ideally leases will be staggered, if they are on M2 you could stager notices over a 6 month period.  Let them know that rents will be raised to market and be prepared for some push back. Some may decide to move but as long as you are at market they will likely not have anywhere less expensive to move to. Purchasing a property will usually result in some vacancies so be prepared.

Ideally you will be able to do some upgrades and push rental rates even higher.

Some new landlords opt to raise rents slowly over time but all this does is cost you more over the long term than having some tenant turn over. Cleaning house is financially smarter and the reality is they may not all move which is a win/win.....fill market, no reno expenses.

The fact that they may be long term tenants is irrelevant to your business aside from the fact that they may be more inclined to stay even facing full market rents. Their reluctance to move is to your advantage. If they can not afford market rent it is best they leave sooner rather than later.

Take the time to study your state landlord tenant regulations before you start your business. They are your business bible for operating and will have all the answers to your questions. Answers are state specific.

Leases transfer with the property, they must be honoured. The seller should be made responsible for providing one unit vacant. If one or all inherited tenants are on M2M, which is preferred, you will be in a much stronger position. Ideally rents will all be below market, allowing you to purchase at a lower price, and M2M leases will allow you to get them to full market asap.

@Branden Drake

If they stay..they stay. Win Win.

Absolutely best business move especially when dealing with inherited tenants below market. If the investor has not built this into their investment plan they are not taking advantage of the reason they purchased the property.

 I don't believe it has anything to do with having a vacancy, that is simply a lame excuse to cover up the fact that they are too soft to efficiently operate the business. The are soft and lazy. As a result long term they lose more money than immediately taking action.

If they do not have the money to put the tenant out and renovate to raise rent to full market immediatly they entered into the investment with the intent of losing money. This is not an approach to investing that I understand.

First step is to educate yourself on finances and leverage. This is key to making decisions.

Second, and as important, do not think of real estate investing as creating a passive income. It's a job, a big job, that takes a considerable amount of ongoing time and effort. If you want passive put you money in a income fund. Real estate investing is work. Take your eye off the ball and it can go bad very quickly.

You state you would like to get out of the property but refuse to accept any advice in that direction. The fact is you do not want out of the property at all even though that is the most logical option. Since you posted with no intention of taking advice, especially in regards to selling, why not just tell us what it is you want to hear from us that meets your conservative approach to investing. Obviously you have a idea as to what you want us to say to reinforce your decision.

If you truly are undecided  flip a coin and choose between #2 and #3. It really makes no difference as long as you are ok with the choice.

"I have financial freedom and could retire now so money is not the only factor for me."

Seems like a colossal waste of time and energy to build a business simply for the sake of doing it. This plan, based on todays economy, could easily bankrupt you. Your chance of success is as high as the risk of failure but my guess is the high level of risk is your ultimate attraction.

As for financing, based on your past business success, I would guess you should already have the institutional and personal contacts to muster financing. Syndication maybe. 

Move forward, don't use him in the future. Be more specific when hiring a inspector now that you are more experienced.

Your inspectors contract will likely protect him from you seeking compensation. Lessons learned, move on. 

My approach is to maximise returns as quickly as possible. Because you have one tenant moving shortly after taking ownership this is a good situation. I assume, based on below market rents and renovations required, you have built this into your purchase price. One unit will be up to full market rent quickly maximising your long term returns. Renovating for 5K and increasing rent by $200 is a incredible return on investment.

My plan would be to get the second unit vacant and renovated as quickly as possible after the first. The reno cost is a solid investment where as having rents below market is a liability. The sooner you replace the tenants the sooner you maximise your returns. Do not delay maximising long term returns. 

Your business should not operate based on doing nothing, the sooner you take action the quicker you force equity and income growth. Minor rent increases over a long period is not a positive move forward it is simply supplementing your tenants rent at your expense. If you have built the money into your business plans to reno and maximise rents the sooner you do it the better.

Get the copy of the lease agreement/community rules. It will depend on your state landlord tenant regulations regarding community rules which may or may not be the same thing as the lease. In most jurisdictions a community owner is permitted to change the community rule, with proper written notice to residents, providing the rule changes do not counter state codes. Land lease communities are similar to having a HOA.

A good example of this is in colder states where community owners are eliminating the use of oil as a heating source. The owner can legally implement a community rule change banning the use of oil heating and force all residents to replace their furnaces to use electric or propane/natural gas.

Be careful in assuming a community owner has no rights or taking advice from those that do not invest in land lease communities. It is usually a balance between owner and tenant.

Most park owners DO have the authority to tell you what to do with your home and how it looks. That is the primary purpose of having community rules recognised in your state landlord tenant regulations.

In most states the landlord tenant codes have leases automatically convert to M2M at end of term. It is most common to simply allow this to happen, maintaining original lease language with annual rent increases, as opposed to resigning new leases every term. Let your lease convert to M2M. It is primarily to a landlords advantage and has no negative impact on good quality tenants. M2M is a win/win scenario.

You have no contractual commitment to the original agent.