What are the actions items needed when inheriting tenants?

Question

The good news is I'm getting very close to closing my first multifamily property but the bad news is I woke up this morning thinking about my inexperience regarding the differences between leasing a SFH versus inheriting existing tenants currently in the complex. I know the existing leases must remain in place until their expiration dates but I imagine I need to provide the existing tenants a "change of ownership" form, provide new mgmt contact info, provide new rules regarding repairs and policies, etc. Admittedly, I have yet to do a thorough search on what the action items may be but I don't remember any advice specific to this scenario in any of the REI books I've read. Please point me toward a good book or other resource that covers this topic. Additionally, any first hand knowledge that can be shared is even better. Thanks in advance for everyone's help.

-Marshall

Marshall Stewman · Answer

Sam Seth

Ryan M. · Answer

Hopefully this is well performing building with the current tenants.

When we buy them it's because the tenants have over ran the place. We have never had a existing tenant stay more than 10 months after the closing.

Marshall Stewman · Answer

Thanks @Jose Enage! Very helpful.

Sam S. · Answer

hey Marshall,

Change of ownership is one thing, based on my experience, you also need to

1. ask the current landlord to make you the custodian of any security deposit

2. if the landlord has not put money in the bank, then ask for 5% (thats standard in most states), and write a letter to the new tenants with check for this 5% and deposit the new monies in a larndlord /tennant or other such accounts in your state.

3. you could also ask the tennants to sign a new lease (if they agree to cancel the existing one with their landlord), this would ensure you have a 1yr of cashflow.

but make sure you do the "change of ownership" as you said and #1 and #2.

being a recent landlord, my lawyer told me these were very important and i have now learnt the same reading and gaining experience

Jose Enage · Answer

Hey Marshall,

Here's a BP thread that might answer your question:

http://www.biggerpockets.com/forums/12/topics/10589-buying-rental-property-with-existing-tenants