Purchasing Occupied 4 Plex with shabby M2M leases

[Damon Rucker]

Hello all!

I’m preparing to close in a few short days on my second investment property: a cash flowing, fully occupied 4 plex! Though I’m hoping that this new chapter in my investing career is as promising as It looks, I’d love some perspective on how to tackle the following challenges.

1. All tenants are currently on shabby excuses for month to month leases. Upon their signing my lease, what do I do about security deposits? The previous owner never collected a deposit for 2/4 units. Is there a tactful yet effective way to acquire deposits now?

2. All the units are $50-$75 below going market rate. Should I bump up the rents immediately, or is there a more tactful way to go about It that doesn’t motivate the tenants to move away?

3. I'm setting up my second LLC to place this 4 plex in. What should I do if my LLC papers are still processing and the closing deadline has arrived? Can I transfer the property at any time, into the LLC or only right now during closing?

4. Any other wonderful advice that you can think of that would help set me up for success, here on my second go round?

Thank you to all the brilliant minds on this forum. I look forward to any and all comments.

[David Bardwell]

@Damon Rucker I'm in almost the EXACT same situation. Cleveland 4 Plex closing in next 2 weeks. Occupied with month to month leases. They are oral agreements no less!

But I feel I've got a good plan on how to proceed. I'd be happy to connect and share ideas. Shoot me a message if you'd like to talk.