Buying a property with existing tenants

[Jennifer Fernéz]

Hi ,

I'm interested in purchasing several properties, but some of them have tenants in them.   How do you do renovation work with tenants living there?   What if I don't like the tenants but like the property?   I'm assuming you can not evict tenants based on new ownership.    How can I raise the rent once I buy it if I feel it is too low?

Thanks,

Jennifer

[Kimberly T.]

All the rentals we've bought had existing tenants (to be fair, we've only bought multifamily units, so that's typically how it goes).  To answer your questions:

- How do you do renovation work with tenants living there? - - Depends on the type of work.  We've done exterior reno work (paint, landscaping, etc.) with tenants there, but haven't done much, if any, interior reno work.  If they're problem tenants (pay rent late, trash the unit, are very dirty, etc.), you don't want to do interior reno work anyway, because they won't take care of it or appreciate it.

- What if I don't like the tenants but like the property? I'm assuming you can not evict tenants based on new ownership. - - No, you can't evict for that reason.  If they are month-to-month, and it isn't under rent control, you can probably serve them a notice of termination of tenancy to make them leave, though (but check your state/local laws about that).  If they are on a lease, you have to wait until their lease is up. Or you could offer them cash for keys and see if they take it.  You inherit the lease with the property, so you definitely want to read through it during escrow.

- How can I raise the rent once I buy it if I feel it is too low? - - If the tenant is month to month, you can follow state/local laws regarding rent increases.  If they are on a lease, you have to wait until the lease is up.

I'd recommend you read about your state/local landlord tenant laws to see what your rights and responsibilities are.  Good luck.