What to do after you buy a property with existing tenants

Question

Hi everyone,

I am purchasing a duplex with existing tenants in it. I would like to move into one unit and rent out the other. Both units are occupied with existing tenants now. I am wondering what are the steps I should take once the purchase is closed. From my understanding, I should do the following.

1. Give every unit a notice of change of ownership within 15 days of the closing.

2. With the unit I would like to move in, do I still have to sign a new contract with them? They are currently under a month to month lease. Should I proceed with talking with them to see how I can help them move out without signing a lease?

3. After the discussion, should I give them a 60 days notice to evict (they have been there for more than 1 year) or get a 30 days to move out notice from them.

4. If I do not sign a lease with them, does it mean I could not collect the rent before they move out.

I could not find much information online. Any clarification or advise would be greatly appreciated. Thanks everyone!

Best,

Gin

Dustin Allen · Answer

@Jin Zhang

Did you use an agent on this purchase? They should have made it a priority to have one of the units delivered vacant. In California, tenants who have been in the property for over one year need to be given 60 days notice. This isn’t something you want to wait until after closing to start working on.

Peter M. · Answer

@Jin Zhang Send them both letters introducing yourself and where to send payment. Wait for the first month to see if one gives you problems. If so, that becomes the unit you want to move into. Give them 30 or 60 days notice depending on the existing lease and only if they don't move out do you have to evict. However if they don't pay rent you can move to evict immediately.

Jin Zhang · Answer

Thank you for the clarification! This is very helpful.

Jin Zhang · Answer

Thank you for the information! I will definitely check out the videos!

Jin Zhang · Answer

This is a great idea to find out the good tenant!

Jin Zhang · Answer

That is a great idea! I definitely plan to talk with them to see how I can help them with a smooth transition.

Jin Zhang · Answer

Thank you for clarifying this! I am more clear about the process now.

Marcus Auerbach · Answer

@Jin Zhang - if you are buing with owner occupied financing you have to move in after closing, depending on the loan probably winthin 60 days. So you have to decide before closing which unit you want to occupy.

The day of closing you can provide a intro letter, your contact info how to pay rent etc.

The lease survives the sale of the property, so no need for a new one. Make sure you get the security deposit.

Hopefully you have received copies of the leases as part of your accepted offer. The leases govern the termination primarily over state law. If they are MTM you are not evicting them, you are just terminating 9or not renewing) the lease in accordance with the terms set forth in the lease. Eviction is a judgment when the lease is broken, not paying rent etc..

You can find 5 how to videos about house hacking on my YouTube channel, the last one adresses these questions specifically, link is on my BP profile page.

Hope this helps!

Michael K Gallagher · Answer

Hey @Jin Zhang congrats on your new Duplex!  yes I would 100% agree that checking with your local laws, or even doing an area specific forum search her on BP would be your best bet.  But as a rule of thumb you have the right idea...if the tenants do not have an active lease and they are on a month to month you will have to provide notice of non renewal and work with them on the move out.

It's usually not always the most obvious but if you spend some time speaking with them and figuring out what they really need/want...there is usually a win:win situation that can be found for these issues.

Aaron W. · Answer

@Jin Zhang Once you purchase a property with inherited tenants, the lease will follow with the transaction. If they still had time on the previous lease, then you'd have to honor the lease until expiration and they will need to pay you rent based upon that lease. In the case of month-to-month, then you can choose to sign a new lease, move them out, or keep the month-to-month.

You'll want to check with local laws to ensure how much notice you are required to give tenants. Also, California tenant laws are not the most friendly to landlords, so it could be a pain to get the tenant to move if they don't feel like cooperating.

Best of luck!

What to do after you buy a property with existing tenants

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