Best Strategies for Removing Tenants Before Renovating a Multi-Family Property?

Question

For those who have flipped or renovated tenant-occupied multi-family properties, what’s the best approach to getting tenants to vacate? Have you had success with cash for keys, lease non-renewals, or other strategies?

Also, any legal or logistical challenges I should watch out for? I’d appreciate any advice or lessons learned!

Thanks!

Also, any legal or logistical challenges I should watch out for? I’d appreciate any advice or lessons learned!

Thanks!

Greg Kasmer · Answer

Daniel - With a small multi I offered all tenants the option to renew at rent levels that were higher, but not quite market levels (maybe $100-$150 less). Half the folks stayed and the other half left, so that will give you an idea of which units you can address first during your renovation plan. Of course, if you prefer to empty all the units and renovate all at the same time you'll employ a different strategy.

Joshua Christensen · Answer

I agree with @Charles Carillo about offering to help with moving costs (similar to a cash for keys).

The other consideration is to give them an option to stay on at a higher rent without renovation costs.  No Turn Over at market rent is a positive.

Provide a 2 tiered approach with 2 options.  60 day notice of Increased Rent or $500 move out allowance stipulating damage limitations.

Of course, if they are in long term leases, there's not much you can do other than wait for their lease to expire before making the offer 60 days before expiration.

Charles Carillo · Answer

@Daniel Barba

When I have inherited tenants, I have been most successful when I have provided longer non-renewal notices, like 60-90 days, and offered to assist with moving costs. I understand this is not a requirement, but I have never received a damaged unit from an inherited tenant or any legal issues. I know this is above and beyond what most municipalities require, but being fair will make the whole process easier.

Additionally, a new landlord can reduce the 60-90-day notice by offering more moving assistance (cash and/or labor) if they move sooner rather than later.

Stuart Udis · Answer

The best outcome would be to negotiate with the seller to deliver the building vacant. It's not an easy ask, and is usually best served for instances where the building is in extremely poor condition. In those instances you may take the position that its a liability to assume tenants in such poor conditions.

Next best thing to do before taking any action is to  carefuly review the existing lease to ensure there's no ambiguity that can be interpretd in the tenants favor. So many leases transition to month to month but elsewhere in the lease still refer to "another term". This is the type of ambiguous language that can be used against the landlord and see it all the time. Also, failing to have all appropriate licenses in place can be used by a savvy tenant to delay lease terminations. Understand the local laws and procedurs and identify ambiguitis in th lease early on.

Even without ambiguities, its good practice to have the tenants sign an estoppel certificate confirming key terms to the lease such as rent, renewal terms, deposits that are held etc. You can even use this to clarify ambiguous terms in your favor.

Robert Rixer · Answer

This is why I love this community, people are all about doing the right thing. Treating the tenants like humans will go a long way in the longer term.

Richard Pastor · Answer

I had to do this. I purchased a 4 plex with had money and the place needed a complete rehab. I had 3 tenants. 2 on month to month and lived there less than a year and one on a 6 month lease that lived there for 6 years. Oregon being very tenant friendly I could not refuse to sign a new lease or kick out the tenant who had lived there for 6 years. In Oregon you can only terminate someone's residency after one year for 3 reasons. One of those reasons was a rehab where its unsafe for someone to live there while work was being completed. Also in Oregon you cant raise rent more than 10 percent. They were paying half of market rent so offering them to stay at higher rent was not an option. I ended up giving two a 30 day notice and one a 90 day. I also didn't collect any rent from them while they stayed.

Best Strategies for Removing Tenants Before Renovating a Multi-Family Property?

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