Multi family questions

[Donald Cooley]

Hi all, 

I may have an opportunity to pick up a tri-plex that is fully rented. What is the process when purchasing and taking over the property from a managing stand point? Are there new lease agreements? What about security deposits? What if you have different rules on payments and repairs? Any help here would be greatly appreciated. 

[Jeff Sheraton]

Our company has purchased several "pre-rented" properties in Delaware.  The purchase procedure was straightforward, just a typical closing.  As far as the leases, assuming the leases are still valid (not expired) you should be able to just simply take over the current lease.  You will want to review the lease to see that it meets your expectations.  If the lease is expired (in Delaware at least) the tenants are considered month-to-month tenants and they are subject to the landlord tenant code rules.  You can give them notice to move, or if they are good tenants just let them stay month to month or present them with a new lease (assuming they will sign one).  In Delaware the "rules" are outlined either in the lease (for tenants that have them) or the landlord tenant code in the absence of a lease.  Security deposits should be transferred over to you from the current owner along with any per diem rent.  For example if the landlord collects rent on the 1st and you buy the property on the 15th you get half of that months rent.  

Fair warning, in my experience so far, inherited tenants don't tend to be that great.  My personal thought is that if they were good the owner probably wouldn't be looking to sell.  Not to say you shouldn't buy the property, just don't bank on reliable income simply because the property has tenants.