I am working on purchasing three duplexes that have 5 existing tenants. The problem is that the PM company of the sellers has allowed the properties to become almost uninhabitable (from my perspective). Brown water, non functioning appliances, etc. I'm not sure how to go about getting the properties fixed when there are existing leases that need to be honored. Are the conditions of the units a reason to give them notice and have them move? I know that they have been living this way for awhile but I am not willing to inherit bad living conditions and leave it that way. But we are talking about major renovations that people wouldn't want to live through and I certainly can't afford to put them up someplace else. What's the usual protocol for renovating with current tenants (assuming the renovations should not be put off until the end of the lease).
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y
@Katie M Reece I would make sure the tenants are paying by reviewing bank statements. Inspect every unit and all buildings. Get Estoppel Certs signed by tenants, PM and landlords certifying who has paid what. All deposits and advance rents are your money to be paid at closing. Unpaid rents prior to your purchase, if collected belong to the prior LL.
If the tenant is getting basic services, heat, water, safety etc then you wait till the lease is up to start any renovating-or you do cash for keys or pay for their lodging while you are fixing the place. If the tenants have been living there for a while they are most likely OK with the conditions. I would not encourage them to think otherwise.
Before their leases end give them a notice of non renewal and hope they leave; for now you will have a tough time getting them out otherwise. You can fix some things in the meantime if needed-broken appliances etc. Things that are not disruptive and especially if asked for by the tenant. All the best!
If they are still living there then they are likely slobs and perfectly happy being a pig in &$it . I would not do anything to disturb that or anything that will hurt your income . Doesn’t make business sense to throw out slobs , if they are paying let them marinate in their filth
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
5y
Uhhh, yes, it does make sense to get rid of tenants who are happy living in their own filth. The challenge with a multi like this is that if you renovate one at a time, a high quality tenant isn't going to want to live in one of the units connected to tenants that have no interest in cleanliness.
I would see if I could get all units vacant simultaneously- as leases expire, put them on month to month and once you can give notice to the last tenant, you give notice to all of the tenants and gut the whole building. Otherwise you run the risk of having a brand new unit trashed. Fix it up all at once, get better tenants and sleep well.
Rental Property Investor · Brooklyn NY / Upstate, NY · Member since 2019 · 52 posts · 46 votes
5y
Do the deferred maintenance in stages. I had a similar situation recently. It depends on the configuration but I had all the plumbing redone in the basement along with a water filtration system (brown stinky water too!). I replaced the roof and added external gas meters. While this was all going on 2 of the tenants moved out so reno's are happening now, 1 has a lease coming up soon and the other is getting their act together. The current rent base is paying my interest only loan which I will refi into a fixed this spring. Easy peasy. good luck!!