Assuming tenants

[chrisX]

Hi,

This is my first post in this forum. It`s so great to be able to discuss with like-minded real estate investors. I have come across some 2-4 plexs that are fully rented but the vendor requires me to assume tenants. I have no problem doing that, as a matter of fact, it`ll save me some money. However, how can I protect myself from assuming bad tenants?

What conditions can I put in my offer that will protect me? Should I ask for a tenant interview or something to the effect that if I don`t like the tenants, I can terminate the lease?

Any input is welcomed.


Chris

 

[mcgregok]

You can put in a condition for the seller to provide you with thier rental applications and credit checks if he has them. If the seller does not you can ask (condition) the seller to have the tenants fill out an application for your approval. Note if they are monthly or term tenants.

When you do you inspection of the property note the condition of each unit. Any unit that is not well kept you may want to pay special attention to that tenant.

Ask each tenant how they like living their and if they have any problems with other tenants. Problem tenants must go!

If you discover any propblem tenants put a term in the purchase agreement for the seller to give the tenant notice if on a monthly lease. If a term tenant you will have to deal with it if you decide to continue with the purchase.

Good Luck!
Ken

 

[chrisX]

Thanks Ken for all the useful tips. I didn`t get a chance to use them this time since after my due diligent works, this duplex doesn`t meet my cashflow requirements.

Chris

QUOTE (mcgregok @ Oct 14 2007, 11:24 AM) You can put in a condition for the seller to provide you with thier rental applications and credit checks if he has them. If the seller does not you can ask (condition) the seller to have the tenants fill out an application for your approval. Note if they are monthly or term tenants.

When you do you inspection of the property note the condition of each unit. Any unit that is not well kept you may want to pay special attention to that tenant.

Ask each tenant how they like living their and if they have any problems with other tenants. Problem tenants must go!

If you discover any propblem tenants put a term in the purchase agreement for the seller to give the tenant notice if on a monthly lease. If a term tenant you will have to deal with it if you decide to continue with the purchase.

Good Luck!
Ken

 

[Anonymous]

I am a REIN member and have assumed tenants in the past. Generally I have the tenant sign tenant acknowledgement verify their agreement with the landlord. Such as was a rental deposit paid, amount of rent, rental rebates, any services that are provided etc. This gives me an idea of the relationship. I also speak with the tenants during inspections etc. I ask them if there was anything they would change if you took over, what would it be. Ask them what they like about living there. This will give you a bit of insight into their personality. I also request that I receive all rental agreements and rent rolls from the current owner. Make sure all the info matches up. This will be in as part of your conditions.
When I assume tenants, the first order of business is gift baskets, site cleanup and site improvement such as paint and immediate repairs. (this can also be handled as part of an abatement or having the current owner do these repairs prior to closing). This is all done so the tenants are in love with you from day one. I also throw in a safety upgrade package such as Co2 detectors, fire extinguisher and smoke detectors.
I put my stamp on the property through improvement and new rules. I also provide all tenants with a "move in binder" I know they already live there, but this way they get the rules of the house in a manual. I also provide details of the local landlord tenant laws. In Ontario, the paper has already been written for us, all I do is print it off and make them aware of their rights.
I always portray a business like, friendly responsible landlord atmosphere with my tenants. Although it is not always perfect, and you may get some turnover, it can be worth the work.
It is the investigative work you do up front and the work you do as a responsible landlord after you close that makes assuming tenants easier to do.
Carol Garrett