Closing Today- Advice For Taking Over 4 Tenants

[Dan Kelley]

I'm closing at 2:00 today on a 6 plex building with 4 occupied units. They are a mixture of leases. The one unit has been occupied for like 8 years and is currently on a month to month/verbal agreement. 1 unit is 4 months into a 1yr contract. I believe the other two are on m2m contracts.

What are your suggestions for starting communications with the tenants?

I'd like to meet all of the tenants and go in with a contact sheet of some sort and get updated phone numbers, names, email, etc. I'm planning on trying to get everyone to pay online through Buildium, or deposit rent directly at my bank. I want to eliminate the need to visit the property to collect rent. I'm wondering if I should also open a P.O. box though for those who still wish to mail checks? I'd almost rather just stick with Buildium and my bank though.

Any tips/pointers to make this as smooth a transition as possible? Should I send out a letter first to inform everyone of the change in ownership and to give them my info?

I own the property through an L.L.C., so my plan was to pitch it as if my LLC is a property management company who owns the building and I am simply the building manager. I'd like to avoid having them know that I am also the owner.

Give me some tips please! Thanks!

Dan

[David Panzera]

@Dan Kelley, congrats on your closing today! It sounds like you're pretty prepared to be a landlord and have great ideas. 

First, I would say yes to put the LLC out there as the owner and you as simply the building manager. If you're just "the manager" it's easier to later blame any issues on "that's the owner's policy re: xyz issue, unfortunately."

We always send a letter first with all of our contact information when we transition existing tenants to our management, then our leasing director goes out and meets them, talks to them, shows them what our trucks look like so they know who we are (we do a lot of drive-bys when we're in areas just to eyeball for outside issues). 

As to lease issues, you'll have to talk with all of the tenants and get their stories and then figure out whether you want them to all transition (eventually) to 12-month leases (or whatever timeframe you choose). I would definitely eliminate the verbal lease and switch to a written one as soon as you can, though. I did hear last week of a landlord who worked successfully with a tenant for 15 years on a verbal month to month because the tenant always paid on time but had just had a checkered past and would never have passed screening requirements; the landlord valued him as a tenant and the tenant later bought the property from him using seller financing! But for the most part, written leases are always better. 

As for payment, again find out their stories. Are they older tenants who hate technology? Then a P.O. Box is great for them. But you might make that the exception and Buildium the rule, since that seems to be your gut instinct. Have fun and good luck!