Buying a rental property with tenants and have questions...

[Judy J.]

I'm closing next week, and I have never taken over a unit with tenants and leases before. It's a 3 unit in the town where I grew up. One unit is partially paid for a low income tenant. My realtor is helping me, but I want to ask if there are any other resources out there for beginning landlords. I have rented out rooms in a house before, and rented out an entire house before, but we didn't use leases. 

I will send a letter to the tenants to introduce the LLC/myself, with new address for checks, phone for problems, etc.

Beyond that, I'm in new territory. Do I write new leases or keep the old ones?  

My realtor has done this before and will help me property manage it for a year so that I can decide if I want to hire a company or keep doing it myself.

I also have a LLC that I've started for this and future properties, but I'll ask about that in another posting.

[Kelly N.]

Hello Judy,

You must honor the existing leases and the security deposits will be transferred to you at closing.  In your intro letter, I would also state how much their deposit was and where it got deposited, also mention the rent amount and lease ending date, that way they can let you know if they have some different idea of what those amounts or dates are.

Try to get their applications and any other information from the seller- do they pay on time? any complaints or other communication?  any open maintenance issues?  If you can't get the tenants' contact info from the previous owner, ask the tenants for it as well.

I like to wait a bit to see how they pay and then let them know what the rent will be if they choose to renew.  They will expect an increase and the advanced notice will give them time to decide what they want to do.  Give them a deadline to let you know so that you have time to plan to start marketing the place if they aren't staying.  

Kelly