About to close on our first 4-plex... Now what?

Question

We are about to close on our first 100% 4-plex in San Diego, CA. We are inheriting all tenants and leases. 3 tenants are month to month and the 4th just signed a 6 month lease with current owner. We need to evict one tenant so that we can occupy that unit.

Now what?

We want to raise the rents to market, $100 increase, and have the remaining 2 month to month tenants sign 1 year leases.

Do we go straight to a Real Estate attorney to draw up new leases, eviction forms as well as new ownership notifications? We/I are going to self manage, otherwise I would imagine I could just go to a property management company and they would have all the forms that I need.

Thank you for any input that you have to offer!

Tim G. · Answer

I really wouldn't use the word "evict" when cancelling a month to month lease. I know it seems trivial but you are just ending a contract, they aren't bad people the word has some very negative connotations.

Anthony D'Angelo · Answer

Hi @Mathew Deines

Congraulations of the purchase of your 4-plex. We just closed on a 5-plex in San Diego in Feb, remodeled the whole outside area increased the rent $550/mo total. You need to give the tenants a Sixty-Day Notice of Change of Monthly Rent and a Sixty-Day Notice of Termination for the tenant you want to evict. You could do it your self, I believe the forms you could find online so you can save money if you don't want to go to a property management company or lawyer. Same thing for the lease agreement, you could get it online or sometimes at an office supply store.

Hope this info helps. Let me know if you have any other questions.

Anthony

Troy Sheets · Answer

You're not renewing their MTM lease at the end of (insert date here). Also, I like what @Mindy Jensen said, send out increase notices and you may have several units to choose from :)

Kimberly T. · Answer

@Mathew Deines

As others stated above, "evict" is the wrong word.  You are terminating a tenancy.  You need to serve them a Notice of Termination of Tenancy form.  Whether it's a 30 day or 60 day notice depends on how long they've been living there.  If they've lived there a year or more, you have to give them a 60 day notice.  FYI, an eviction is a legal proceeding (through the courts) whereby you regain possession of a unit through a forcible detainer (it's usually because they didn't pay rent, but could be for other reasons).  It goes on their record and many landlords won't rent to people with an eviction on their record, so that's why it's important to not use that word when you really mean terminating a tenancy.

Personally, we like to have our tenants on month to month agreements, because it gives us more flexibility with dealing with the tenants (throwing loud parties?  leaving trash around the building?  chronically late paying the rent?  Just give them a Notice of Termination of Tenancy so they have to move, rather than having to wait until their lease ends).  You can certainly have them sign a new agreement with you, but you have to give them a 30 day Notice in Change of Terms of Tenancy form before you do that.

If you're looking for forms you can use, some CA Assoc of Realtors offices carry packets of landlord forms that you can buy and use.  That's what we did (the CAR forms are fine for normal rental situations, in my opinion).  Another option is using forms from Dennis P. Block's website (I don't remember if they're free or not, but he's the go-to lawyer for evictions around LA/OC).  His site is evict123.com (yeah, awesome website address, right?).  We used his firm for an eviction years ago.  Of course, you can go to a lawyer of your choosing to get your own forms made up if you want, or use forms from a different website.  Your choice.

FYI, don't be surprised if one or more tenants decides to move out after you give notice that you're raising the rent.  Unless the new higher rent will still be below market, they may go elsewhere.  If you're raising it by more than 10%, you have to give them a 60 day notice; otherwise, 30 days is fine.  You'd use a Notice of Change in Terms of Tenancy form to raise the rent.  As Mindy mentioned, that might be a way to have someone vacate without having to give them a Notice of Termination of Tenancy form.  If you're on a strict timeline to get moved in, though, I wouldn't count on that tactic in case they all decide to stay.

One last word of advice is to read the landlord tenant guide for CA.  I'll try to post a link, but in case it doesn't work, just google 'california landlord tenant law' and it's one of the first links to come up.  It's a pdf from the CA Dept of Consumer Affairs site.  It's very important you know your rights and responsibilities as a landlord, especially in a landlord-unfriendly state like CA.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&sou...

Not a lawyer, not legal advice.

Justin R. · Answer

@Mathew Deines Congrats on the close - hopefully it turns out to be a good investment for you.

Just a general comment that self-managing in cases like this really isn't that hard and it's only in rare cases that you'll need the help of an attorney.  Look for a lease customized for California, understand the basic rules regarding tenant/landlord relationships (the link that others posted from dca.ca.gov is all you need), be fair and kind with people, and treat your business like a businessman.

I've found that the most important thing really is to be fair and avoid being adversarial - as Tim Gordon said, people like to be treated with dignity, and you hold a lot of power over them by controlling their home.  My experience has been that tenants feel quite stressed when a building is sold to a new owner - they'll appreciate being put at ease by your professional demeanor ... even if it includes a raise in rent.

To your specific questions, you can find example forms for everything you mentioned online or - in most common cases - write your own.

Mindy Jensen · Answer

I was going to say what Tim Gordon is in CA, and recommended a 60-day notice. Make sure that complies with your state laws.

Where are you currently living? Perhaps you could serve the rent increase notice first, and see if anyone decides to leave. Then you don't have to remove anyone!

Before you sign them up for long-term leases, run a background check on them at your expense. Make sure you WANT them living there. Month to month leases are much easier to terminate if you discover an unsavory background.

Mathew Deines · Answer

I am not sure that is the correct link but thank you for mentioning it.

Michael Alford · Answer

I lived through this myself, when I moved into the better unit in a Goleden Hill duplex that I picked up in 2013.

Everything @Kimberly T. says is spot on, based on my experience.

I worked very hard to show that I was being as reasonable as possible, while staying firm on the dates that we had agreed for them to move out.

My tenants were there for less than one year, but I still gave them 2 months notice, plus I gave them a few hundred to help with "moving fees" and offered to serve as a good reference.

I did give them the option to move into the other unit that I was about to rent, but they declined because they couldn't afford the new rent after I upgraded it.

They did try to stretch their stay beyond the 2 months, but I didn't put up with that and stuck to the dates in the  Termination of Tenancy form.

Bruce May · Answer

Yea, it does look different but my packet does say First Tuesday. Maybe they let the URL go to a new owner.

Bruce May · Answer

@Mathew Deines www.firsttuesday.com has forms for almost all your real estate needs. I bought the packet for my use. a few years ago but heard they are now free.

About to close on our first 4-plex... Now what?

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