Will property management companies do weekly rent collection?

Question

I am looking at buying a property wherethe current 80 year old owners are local and have been managing it themselves and treating it like a motel. They have hand written agreements with the tenants and the tenants pay rent weekly. The landlords have the have given themselves the right to enter each unit weekly to collect the cash rent payments from the rent book they leave in the units. It is 2 houses Tha they have converted into 7 1 bedroom efficiency apartments.

But I want to buy it and have a property management company manage it. My concern is that there are no legal leases, and the tenants have grown accustomed to paying weekly rent in cash. I would have to retrain them in a new way.

Thoughts?

But I want to buy it and have a property management company manage it. My concern is that there are no legal leases, and the tenants have grown accustomed to paying weekly rent in cash. I would have to retrain them in a new way.

Thoughts?

Peter Tverdov · Answer

If someone asked our company to do that we would probably turn down the business or make it monthly. It sounds like you are buying a boarding house (which is VERY management intensive, we don't manage them).

David Garner · Answer

In my experience, inherited tenants don't usually work out for one reason or another.

One deal we did springs to mind after reading your post....

...we bought the house off the MLS from an OOS investor with a sitting tenant that has been there for many years (I don't know how many, but a lot).

When we first took over we took care of a great deal of deferred maintenance, but we did not increase the rents. the tenant was paying about $600 if memory serves, and market rent for that house is $750 (I know because we leased it again last month).

Anyway.... back to the original tenant...

She always paid late, and was very insistent that it was OK to do so because that's what the old landlord let her do.

This back and forth went on for a while, and in the end she left under  cloud, angry at us for insisting that she pay on time.

I've had similar situations time and time again with inherited tenants, and it seems that the closer their relationship with the previous landlord, the more quickly they'll end up leaving. In many cases, it was only them being super comfortable with their landlord who gave them all that flex that kept them in the property.

Nowadays, if I'm buying with an existing tenant, I assume I'll have to evict for non payment and factor that into my buy model.

Drew Sygit · Answer

Have you checked local zoning laws to make sure boarding house concept complies?

Just because the seller is getting away with it, doesn't mean you will.

This should give you pause on what you're willing to pay for this property - dont't buy someone else's problem!

Also, a smaller property management company might be willing to take this on, but they have other issues in regards to providing you data.

Brian Carnesecchi · Answer

It is an alluring situation because the property gross's $6900 per month and I think I can purchase it for around $550,000. But it's possible that when I change the structure of how it is managed, it might gross less.

Brian Carnesecchi · Answer

Yeah, the current owners seem to have a great relationship with the tenants and they have been there a long time. But I was thinking that when I take it over and it becomes managed more like a business without the personal interaction between the landlords and the tenants, then I would probably lose a lot of the tenants. Thanks for your response.

Nathan Gesner · Answer

It's unlikely you'll find a property manager willing to travel to the building every week to collect money. They may be willing to set up online payments, but I doubt these are the kind of tenants with bank accounts, computers, and the knowledge to set up online payments.

This is more like a boarding house and you usually don't find the greatest tenants in them. You would likely have to start all over.