Posted by mike/nc on December 12, 2004 at 10:49:40:
Thanks Tony, Something smells a little fishy about this deal. Anyways right now it’s his problem and I want to get my ducks in a row before it’s my deal/problem… Thanks…
buying rentals already inhabited - Posted by mike/nc
Posted by mike/nc on December 11, 2004 at 23:21:52:
I’ve got a chance to buy a couple of older singles. ONe for 1k and the other for 2k. They each rent for 275 per with a lot rent of 130 per.(I think these numbers are correct as I just talked to the guy breifly tonight). What are my concerns as to dealing with the tennants already in the houses. Do I go to them and give them a copy of my lease agreement and tell them to sign it or leave? If they dont sign then how long would it take me to evict them with me not haveing a signed lease from them. How do you folks handle situations like this?
Re: buying rentals already inhabited - Posted by Tony Colella
Posted by Tony Colella on December 12, 2004 at 09:44:09:
Mike, when buying property that already has a tenant in place, you are buying subject to the lease agreement that is in place. You will need to obtain a copy of the lease agreement in order to determine your (and your tenant’s) rights and responsibilities.
I also suggest that you obtain an Estoppel Letter (as we described in the book) to make certain that you know exactly how much each tenant has paid in rent and security deposit. You will also want to know if they owe any back lot rent.
When you buy, you will want the security deposits transferred to you by the seller. Many seller’s have not followed the law and held them in separate accounts so this is often an area where the seller claims never to have received a deposit or they claim to have already used it when a tenant was late on rent. This is when you use the Estoppel Letter as your proof.
Once you have a copy of the current lease, you can determine how to terminate it and begin anew with your own lease (if you so choose). State law and the length of the lease agreement (month to month vs. annual etc.) will be deciding factors in how you go about making this change.
Quite often we find that current tenants are not suitable for turn around properties. They may help you create some cash flow for awhile but as you begin to fix up the property, they often become a hinderance and must be removed from the property so that market rates, lower maintenance, less collection problems etc. can be implemented.
If the tenant does not have a written lease, then the lease defaults to a month to month lease and you would follow state law in regards to terminating a month to month lease.
If your property is already in good shape and the tenants are paying close to market and pay timely, then you may want to leave them in place and simply renew the lease at expiration and use your own lease agreement. The same may be true if you have no intention of fixing a place up and the tenant’s rent is sufficient return for now.
Tony