Initial introduction to tenants?

Question

I’m currently in the process of buying 5 units that are fully rented. I know one of the tenants a little because he was a few years ahead of me in high school but the rest I don’t know. Most of them are his family (3 of 5 units).

I plan on making some changes to the lease when they come up for renewal. Should i make an initial introduction when we close on the house? Would we let them know of our intentions during that introduction or wait until their leases come up for renewal?

To add onto this I am active duty Marine Corps stationed in Okinawa, Japan. I could call or email them as an introduction or I could have my parents do the initial introduction. My parents live around the corner and will be helping my wife and I manage the property until we get home in a few years.

The main thing we are going to change is having the tenants pay for their own heat because I don’t think that should be our responsibility. We are also considering raising the rent of one unit by $50.

Thank you in advance for any advice!

Stephen Chatto · Answer

Remember, You are the Property Manager. You are the owner. If your tenants know that you are both, the conversations are much different. I prefer to have my conversations as the Property Manager.

Elizabeth Richter · Answer

@Dwight Cook I think there are a lot of good ideas here. Definitely make a good first impression and, if you can, make improvements to their life before you do the “negative stuff.” Good news first.That could be fixing any outstanding maintenance requests, making the place look nicer etc. Then, give the “bad” news. Which, the changes you are planning to make really don’t seem too shocking as it is, so hopefully they are reasonably people and respond well to reasonable changes.

Robert Edwards · Answer

I don't know that you need to tell them of increases / changing in the lease right off the bat. I would wait until closer to the renewal date (2-3 months before if you want to be nice, but you don't have to...just so they can start looking if needed). But I would talk to them right away, and let them know that you aren't going to be kicking them out. Many tenants don't know that the lease follows the property, so they might be worried you will evict them, and not understand their lease is in fact still valid. Just give them the peace of mind that their housing is still stable.

Colleen F. · Answer

@Dwight Cook first don't forget to have a estoppel before closing specifying what is rent/security deposit etc. for each unit. I would then write a nice intro letter and send it to each occupant when you take over. Don't promise anything specific unless you have already contracted it. Something general like we plan on making some improvements or taking care of maintenance issue etc. How to pay. I am not sure how you plan to shift heat, do that at the end of term of a lease and give them 60 days notice on this change. I am not sure if you have separately controlled units or you are talking about RUBS. RUBS might require an explanation and paying for heat would be viewed as a rent increase by most tenants. For W/D hookups and an additional wall if you know they want these things you can say yes its on our list if asked. Its better to under commit and over deliver.If you know the HS person fairly well I would just give him a call as a heads up you bought the place. Just a hey, you will get an introductory letter from us and my parents may be around the property some as they are helping out until I am stateside again.

Brenden Mitchum · Answer

Hey @Dwight Cook, congrats on the 5-unit deal!It sounds like the property is in a small town. Do you plan on buying more? If so, do you want your reputation as a landlord to be positive or negative, or do you not care? If you don't care or don't mind it being negative, it doesn't really matter what you do here. However, if you want to be known as a great landlord that people in your town want to rent from, be as open and honest as reasonably possible with your tenants, from the start. Giving them a ring might work fine but would you want someone to call to tell you their going to bump your rent or come by and speak with you in person? On the other hand, if you expect any tenants to react violently to this news, sending the parentals out might not be the best idea either. That one will have to be a judgement call since you know more about the property and tenants than we do. Lastly, you might consider only instituting one rent increase at a time. So, maybe wait 6 months after starting the heat bill-back to bump that one unit $50. If they're all on-time, paying tenants that have kept their units in good condition, there is no reason to upset any of them more than you have to. A vacancy is likely to hit a lot harder than a few hundred bucks of potentially lost rent.Hope this helps a bit! Please, feel free to reach out if you have any questions or just want to chat!

Brenden Mitchum · Answer

@Dwight CookNothing wrong with bumping rents if you're adding real value to the tenants, especially if it was already under market! Smart call though to space out the rent hikes a bit to keep good, paying tenants!Best of luck with the project!

Colleen F. · Answer

@Stephen Chatto if this is in a small town no chance that he is going to play that game well. People talk and you just come off bad. You can talk about this is how we will manage the property and not use ownership language all the time but concealing ownership just doesn't work in some environments. It is in the town records and the lady down the street files those records. Real Estate agents talk too.

Dwight Cook · Answer

@Colleen F.We plan on shifting the heat when the lease comes up for renewal each unit has its own heat source. I’m honestly now sure why the previous owner paid for it. I will most likely end up sending a letter then eventually introduce myself in person when we get ready to do some of the bigger upgrades.Thank you for your advice!

Dwight Cook · Answer

@Brenden MitchumThank you, we are definitely excited for this one!Yes the property is in a really small town. I really appreciate the advice. I definitely care about being a good landlord and plan on buying a lot more properties as time goes on. I plan on trying to keep the current tenants as long possible from what I’ve heard and seen they seem to be good. That is a very good point! I’m going to have them start paying there own fuel as soon the lease comes up for renewal but I’ll wait until it comes up again after that to bump it up the $50. We also plan on putting in washer and dryer hook ups for that unit and putting in a wall to give them an extra bedroom.