Inheriting Tenants

[Michael Attaway]

Hello all!

We are closing on a new duplex at the end of this month, and one of the units is currently occupied.  The tenants there are on a month to month lease and are paying a couple of hundred dollars below market rent in the area.  We would like to raise the rent to the market rate and get them on a 6 to 12 month lease.  Also, we like to do background checks, credit checks, income verifications, etc on all of our tenants, and we don't have that information on them.  I think they are a little worried about having new owners, and so, we may need to be very diplomatic in our handling of them.

Do any of you have any advice on dealing with preexisting tenants?  Thank you in advance!

[Marcia Maynard]

We start with a letter of introduction and let the tenants know we will not be raising the rents at this time. This puts them at ease and helps us establish a positive relationship. Tenants are then more likely to open up, cooperate and share important things, like the property history and what they need to be comfortable in the home. 

We introduce them to our management style and rental agreement. We establish new tenant files, but keep the old records too (if given to us by the previous owners) especially the original move-in checklists. We only do MTM, as leases tend to lock the landlord in more than the tenant.... we like the flexibility MTM gives us.  Also, we can rent up easily at anytime of the year, so we don't need to time our turnovers to the seasons. 

We do a new property condition report and note any deficiencies in the unit. Then we ask the tenants if everything is working okay and to tell us of anything that needs maintenance or repair. We immediately address deferred maintenance and damages. 

After we have spruced up the place to our standards, then we consider whether we need to raise the rent. We purposely keeps rents a bit below the going rate for our area. This gets us a bigger prospective tenant pool and encourages longer tenancies. When we do a rent raise it is generally timed to coincide with some type of upgrade we have done. For us, the best month to raise rent is May, but we have raised rents at other times of the year as well. We will also raise the rent if the tenant starts breaking rules. That encourages them to get back in line or ship out, and provides us with some compensation for the extra trouble.