Question about lease agreements.

[Matt Waggoner]

Hi all,

Self confessed newbie here. I'm in the negotiation stage with a rental property I've been very interested in. Now that I'm getting closer to being a real estate investor, I am grappling with the realities of property management. In order to improve cash flow, I am electing to manage the properties myself, however, I'm planning on using a software to help streamline things. So if anyone has recommendations on property management software that seems to work well for them, I'm all ears. Additionally, I'm wondering about the lease agreement. Currently I am looking at taking over to duplexes. All four units are occupied, with long established tenants. They're all month to month, and I am needing to have them enter into a new lease. When I'm doing so, I'm trying to keep myself distanced from the tenants to an extent, I don't want them to know who I am, I have represented myself when I have viewed the properties as the person representing ownership, not the owner himself.

When I have the tenants sign their new lease, am I allowed to use the LLC that I am establishing as the parties entering into agreement? Or does this have to be with myself as the owner? I am financing this property, and the financing will be in my name, not the LLC. So if evictions are on the horizon, I'm not certain how the rental agreement will be perceived if the agreement is with an LLC rather than the owner of the property.

if others have ways or ideas on how to have a firm yet open communication with tenants, I'm all ears. My goal in purchasing rental investment property is to develop passive income, however, I understand that owning rental property can be anything but passive at times. I'm just trying to minimize problems for they start, especially since I'm inheriting these tenants.

thanks so much

matt w

[Kim Meredith Hampton]

Matt,

Take it slow and just make sure what you are doing is legal, right and doesn't get yourself in trouble. There is nothing wrong with hiring a real estate attorney or property manager for the first year until you get the hang of everything and know the ins and outs of the laws and municipalities in your area.

If I am reading your post correctly, you are buying this in your personal name? If that is correct, your leases would need to be in your personal name as well. (Remember, these are legal documents)Later on, if you change over to an LLC if your loan docs allow this, then you can update everything. If you did need to go to an eviction and these docs are not prepared correctly, you get everything thrown out by a judge and have to start all over again.

Inherited tenants can sometimes be a nightmare, especially if they have had free reign to be late, no entry, bad habits, paying late etc... It is imperative to get to know each one before you ever offer a renewal, you may not want that tenant, and most likely they are way under market on the rent. Lots to digest