new land lord - inherited tenants

[Brienne Metcalf]

Hello,

I am a new investor in the metro Detroit area.  I have been learning about real estate investing for over 5 years and finally took the first big steps this year.

I purchased a short term rental in Bellaire, MI.  This is a vacation spot that I normally visit several times a year and the short term rental income will help offset the costs.  It was already furnished and used as a short term rental and therefore turnkey.  I closed 2 weeks ago and already had my first guest!

I am also purchasing a duplex in Westland, MI which is a city near Detroit and close to the airport.  I am closing next week.  There is a long term tenant that has been there 23 years and a tenant that just moved in and will be staying 6 months although both do not have signed leases and therefore are considered month to month.  The long term tenant gave a security deposit and the newer tenant did not (he is a friend of the seller).

I am wondering how to go about the first few months.  Since they are month to month I was thinking about keeping them month to month for a little while to see if I like them as tenants.  I do not see that the long term tenant will be a problem but if the newer tenant doesn't work out then at least I can ask him to vacate within 30 days instead of being stuck for a year.

Any thoughts or advice is greatly appreciated.

Brie

[Chris Grenzig]

@Brienne Metcalf first off @Kevin Sobilo's points are all excellent. 

If I were in your shoes and you wanted to keep them on MTM I would have them still sign a MTM lease and make the one resident pay a deposit, assuming you can sign new MTM leases in your area.
I personally would still probably shift them to longer-term leases anyway, but it's not a bad idea to feel them out for a few months. It's generally cheaper to non-renew someone if they stop paying than to try and evict them. 

Also, before non-renewing I would walk the units if you haven't already and get a feel for the condition of them. Maybe the unit is more rundown and is going to require additional money to turn and you don't want to spend that money right now. Or maybe you think they're not taking care of the unit the way you want them to and you want them out now so you can fix it up and find someone better potentially. 

Bottom line, no matter what you do, I would never keep someone without some form of a deposit and some form of a written lease.