INVESTMENT

Inform tenants of inheritance of change of ownership


This week’s question comes Rhett Upstairs Real Estate Rookie Facebook Group. Rhett is asking: How do you inform one Tenant by inheritance Have you changed ownership after closing a property?

When you are a tenant heir, you are often a lessee heir, so it is important to know exactly What is the rent the tenant is paying, Their security deposit, And Their lease terms During the period of your due diligence. If you want to notify your new tenants of a change of ownership, make sure you do so professionally so that they can reach you on your business phone at the time you set availability.

If you want Ashley and Tony to answer a real estate question, you can post on the Real Estate Rookie Facebook group! Or, call our Rookie Request Line (1-888-5-ROOKIE).

Ashley:
This is Real Estate Rookie Episode 110. My name is Ashley Care and I’m here with Tony Robinson. And today is a rookie answer. We pulled a question from Facebook for you that we are going. Tony, what’s the question today?

Tony:
All right. So today’s question is, and I have to see from whom. It’s posted on Rhetts Miller’s, Rhetts Real Estate Rookie Facebook group. How do you notify an inherited tenant to change ownership after you close a property? So my long-term rent, they came empty or I bought them empty, then we rehabilitated them. So I couldn’t actually deal with someone else’s tenant inheritance. So let Ashley, the queen of property management, tell us about your experience. What do you think of this?

Ashley:
I’m not sure I’ve actually held that title, but between me and you, I’ll accept it. So the first thing that can happen is that when an investor or someone is selling a property, they may not want the tenants to know that they are selling. I have a property under contract right now, and the owner doesn’t want tenants to know they’re going to stop renting, or I don’t know what bad things will happen to him, but he doesn’t want them to know.
But the first thing you should do is try to negotiate with the seller that you can send the Estopel contract to the tenants. And that will be before you are bound to the property. So it can be done during your due diligence where you are sending them a sheet of paper and it basically puts their name, their lease terms like what are they renting? Do they have any pets? When does their lease expire? Do they do snowfall and landscaping, or is it not included? So in this form you want to ask different things, but it is basically you are verifying their lease agreement and then asking other terms as well. What utility are they providing? It just makes you realize that what the landlord is saying is the same as what the tenant is saying.
And another big issue is the security deposit. Make sure they are on the same page about the security deposit. If you get copies of the lease agreement it definitely helps to make sure that what they are saying is true, because basically you are really leaving the lease agreement and not what anyone actually said, but many times these are mom and pop landlords, their No lease agreement. It can only be a verbal agreement or there are no details in the lease. So this is a great time to send these estoppel deals so you stay on the same page.
And then as far as you buy the property, you want to at least let them know the day of closing, when you have taken ownership of the property and a great way to do that is to keep something written. So maybe you might close this door. You can mail them so they arrive on your closing day. But I think a great way is to actually tap it on their door, get it in their hands. So you know they’re getting it and then send another copy of certified mail or something like that. If it is a property where there are some common fields, you can post like a notice. Here is the information of the new owners. This is how you communicate with them. This is what you do for maintenance, different things like that. But I really like to write everything. I’m sure if they try and call another landlord, the other landlord won’t answer because they’re not the landlord. They don’t have to deal with that property or they will, and they’ll just move on to your information.
One thing you don’t want to be, what happened to me is that a tenant didn’t get my information properly. And the owner gave them my personal cell phone number and I always used a Google Voice number. So there was a little mix that could be avoided by providing your information as soon as you close the property. So what else am I missing that you want to know, Tony?

Tony:
Yes, no, there is a lot of good information out there. So with this Estoppel deal, what if there is no lease, right? Suppose it’s a super mom and pop, as you said, it’s all verbal. When you go out and try to fulfill this estoppel deal, if they are like them, have we not talked about any of these issues? Can you impose a new lease on that tenant since they haven’t signed one or the like, and it will probably vary from state to state, but at least where you are, e.g., what is the process if there is no lease?

Ashley:
Yes. So if there are no leases and they are considered every month, you have to give them notice if you are going to increase the rent. So I don’t know what it is, but in New York State, it’s something if they stay there less than a year, you give 30 days notice. If they stay there for less than two years, you give 60 days notice. And I think beyond that, I think it could be 90 days notice. So you have to follow the rules like that. So the day you close, you can also negotiate your contract with the seller that they give tenants notice that it takes 30 to 90 days to close the property anyway in New York State. So you can always discuss that they are giving notice for that rent increase to cover some of that period.

Tony:
And then do you actually shake hands and introduce yourself when you buy a new property? Or is it just like mailing their information, the Estoppel agreement or the new lease?

Ashley:
Yes, I’ve always just mailed. In the very beginning, when I only had a few properties, I was working on properties there and I was there for shows and things like that, and they knew I was the owner, but then another, I tried to see myself as a property manager rather than an owner. And I mailed things and tried to limit the time so I didn’t have to go to the property often.

Tony:
Have you ever had trouble trying to enforce a new lease with some of the tenants you inherited?

Ashley:
Not really. Because I will do something, this woman has been living in her apartment for 30 years. It was a two bedroom, a bath. Everyone else was paying 500 500 a month, which was still down the market. And he paid 300 300 a month. So I gradually increased what I did with it. So I think for more than six months we’ve increased it to 425, I think, because he not only paid for his own water, but also somehow outside. So I try to work with people to do that, just instead, oh, your rent is going up to 25 525 next month. And then I’ll do comparative work. I show them that I am actually renting them out in the rental market. So I do a letter that says comparable to the area. So this apartment has been listed online for this amount of rent. It’s like you, two bedrooms, one bathroom. The same amount of upgrades. And that’s 800 a month and I’m still offering you 750 or something like that. So I try to show them that I’m not wrong. I am not oppressive. It’s just that they’ve gotten a great deal in so many days. And I’m just renting it out in the market.

Tony:
Last question. Do you often evacuate tenants when they receive a notice of rent increase or do you say it’s like 50/50?

Ashley:
I don’t really have anyone who has vacated I don’t really think it’s because of the rent increase, because I try and do it so fairly where it’s not a huge amount. But no, I didn’t deal with it.

Tony:
Man, you made it sound simple.

Ashley:
Which is good in my opinion.

Tony:
You made it sound very simple.

Ashley:
I mean, I still have vacancies where I can leave people, but never to raise rents, I guess.

Tony:
I’ll just think it’s part of the Rates argument here and like, hey, if I buy this place and then I try to raise the rent, am I going to finish four empty units? But it seems that unless he does it in a kind of fair and consistent manner, hopefully it’s not too much of a problem.

Ashley:
Yes. And it also takes time for people to find housing. So it probably won’t be instantaneous because they need to give you a notice that they are leaving and they are all likely to leave. But you can do a walkthrough with them and say, I want to increase its fare. And maybe there are some things they want to do on the property that you can show, okay, I’m going to fix it for you, make it beautiful, and your rent will go this far. So be sure to contact your tenants and listen to them, as we always talk to a seller, why are they selling? The same is true of tenants. Why do they want to move? Why do they want to stay? This kind of thing, especially your first feature.

Tony:
Yes. Well, it’s love. Ash, I think we hit the question of Rhetts or we don’t, I don’t do any heavy lifting in this episode, but I think-

Ashley:
You asked great questions though.

Tony:
I like Rhetts’ questions like you, so I don’t know. Any final finishing thoughts?

Ashley:
No, I don’t think so. Thanks for interviewing me for this episode.

Tony:
Make my best Oprah impression today.

Ashley:
You get a card, you get a card.
Well, thank you so much for listening to Rookie’s answer today. I rented Ashley from Wealth and he was Tony J. Robinson. And we can’t wait to see you at the BiggerPockets Real Estate Conference in New Orleans.



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