Posted by mike on April 02, 2005 at 23:51:50:
Frank what part of MO are you in?
Buying rental Homes w/tennants in them - Posted by Janet
Posted by Janet on April 01, 2005 at 14:40:33:
I am planning on buying my first rental property next week.
It is a Duplex, with both sides rented already. They have been their for about 6 yrs.
I know I should ask seller for any deposit money, and if tennants are on a lease agreement, and for how long. Should I request a copy of the rental applications or lease agreements stating their rent etc. from the seller before closing?
If tennants are on a lease agreement with seller and I want to change the lease; once I take ownership can I give the seller/tennants new forms for the tennants to fill out, and place them on a new lease agreement with me, or do I have to wait until their lease period with seller is up?
If tenants do not have renters insurance, can I tell them they have to have renters insurance?
Once I take ownership of the property, am I required to make repairs, like painting, new carpet etc.? If so can I go up on the rent, and tell them no pets allowed, even if they already have pets? Am I entitle to a key to the duplex once I take ownership or should I have new locks put on duplex giving them a new key and myself extras as well?
Is their anything else I need to do, or any other advice please let me know.
Thank You,
Janet.
Re: Buying rental Homes w/tennants in them - Posted by Janet
Posted by Janet on April 03, 2005 at 14:14:01:
Thank you all for the information, it is very helpful.
LOL.
Janet
Re: Buying rental Homes w/tennants in them - Posted by Cathleen(TX)
Posted by Cathleen(TX) on April 01, 2005 at 15:55:33:
Wow, lots of good info - just wanted to add that you should get a credit toward the rentals paid from the date of closing escrow to the first of the following month when you begin to collect the rents i.e.- if the rent is 500.00/mo divide by 30 days. If you close escrow on the 10th the seller should credit you 20 days rent times 2 for the duplex.Seller should credit you the security deposits upon closing as well.
Re: Buying rental Homes w/tennants in them - Posted by Bank-of-Frank
Posted by Bank-of-Frank on April 01, 2005 at 15:40:43:
I have several duplexes, and they have been fair investments for me. I am in Missouri, and speaking from Missouri experience.
This is my take on your questions:
Should I request a copy of the rental applications or lease agreements stating their rent etc. from the seller before closing?
>>>>Yes you should get the lease agreement, this will let you know EVERYTHING that you are obligated to, ie I just purchased a property, and the lease stated I had to pay trash AND yard service. Totalling around $120/mo cutting into cash flow, and affecting value. This also lets you know the term, deposit amounts, etc. The lease is a MUST. If they have been there 6 years, the application is nearly irrelavant IMHO. >>In my state, you must honor the lease during the lease term, including “mom lives in side 123, and does not pay rent for the next 2 years”. >>I don’t think you can force them, however I make them SIGN a form attached to the lease that states to the effect “I understand by NOT having renters insurance, I expose myself to the following risk…”<<<
Once I take ownership of the property, am I required to make repairs, like painting, new carpet etc.? If so can I go up on the rent, and tell them no pets allowed, even if they already have pets? Am I entitle to a key to the duplex once I take ownership or should I have new locks put on duplex giving them a new key and myself extras as well?
No, you do not have an obligation to do cosmetic upkeep, however I typically do some for good morale. If they have a pet, you revert back to the lease, if it says not pets… pets have to go. If it says pets ok… they stay. Yes, you should get keys, and NO I would not change them. IMHO, the less you disrupt the current process, the better. Creatures of habit, don’t put them through change.
I hope this helps.
Frank
Re: Buying rental Homes w/tennants in them - Posted by Frank Chin
Posted by Frank Chin on April 01, 2005 at 15:36:13:
Janet:
You got most of the issues covered.
-Deposit Money: Check the landlord tenant laws of your state. Some require deposits in escrow accounts, and some not. You’ll have to make arrangements to have the funds transferred depending on how its held.
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Estoppel Letter: The landlord would have the tenants sign the estoppel indicating the lease terms, amounts, deposits held etc, and deliver it to you.
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Lease: You’re basically stuck with the lease. When I took over with tenants, the former landlord executes an assignment of his lease with the tenants to me.
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You can ask them to carry renter’s insurance by explaining that landlord insurnace does not cover their property.
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I haven’t volunteered to paint carpet for existing tenants. Simply wait for the lease to expire to raise the rents. What I did was clean up the place, paint the common areas to make the raise appear tolerable.
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Keep the locks the same. I only change them when new tenants move in. I require a set of keys for emergencies.
I would try to meet them and say hello, but skip talking about a rent increase till its time.
Frank Chin
Re: Buying rental Homes w/tennants in them - Posted by ken in sc
Posted by ken in sc on April 01, 2005 at 15:32:11:
You must abide by the terms of the agreement in place until it rents out. You should get the original leases and applicatyions. The leases should be assigned to you at closing. You must fix whatever needs fixing as per the lease and as per the landlord/tenant laws of your state. You cannot make them get insurance unless they agreed to do so per the lease. Same with pets. Read the lease and read your laws!
My advice is to calm down. 6 year tenants that pay on time are hard to find. Don’t do much at all at first, just hang out and make sure they know how to pay you.
Congratulations on your purchase.
Ken