Inheriting tenants in a new duplex

[Kimberly Roth]

I'm closing on my first duplex in less than a week.  There have been long-time tenants in place and I would like to keep them as they take good care of the property (mowing and snow removal) but they will need to sign a new lease (currently month to month) and pay the higher rent that will be charged.  

How do I initiate the new relationship?  I want to send a letter and meet them (purchasing out of state but will be there to close in person). What should I say in the letter?  I figured I would wait for the news about the rent increase until I meet the tenants.  

I know I need to set up new rules, set up payment information, new contacts, etc.   Is there a standard anyone uses when they inherit tenants they would like to keep?  A checklist of sorts so I don't miss anything with existing tenants versus brand new tenants?

Thanks in advance!

Kimberly

[Nathan Gesner]

Originally posted by @Kimberly Roth:

What do you do during the initial inspection? Is this just to see what needs to be fixed outside of the inspection report received before closing or as an opportunity to get to know the tenant and hear from them?

First off, I will tell you I am not a fan of small, incremental increases. If you do multiple small increases, there's a good chance of increased confusion, resentment, and eventually everything could fall apart when the current renter realizes they can't afford market rates (or they don't want to). My recommendation is to determine market rate, then hit the tenants with one increase to get it over with. You may want to double-check their financials to ensure they're qualified for the higher rate. Now, these are long-term renters that you say are excellent and they do some work on the property that provides value. You obviously don't want them scared off, so consider keeping them lower than market rate as a reward for their work and faithful performance.

As for the inspection, I use it to document the current condition so I can track issues from this day forward. If they've lived there for three years and the front window is cracked, you can't tell if it was that way when they moved in or if they broke it last week. It's important to document the condition at the time of purchase so you can at least track condition from this day forward. I use a lot of pictures, but you could use video or even a paper checklist.