So, you just bought a tenant-occupied property – congrats! But now the excitement's over and it’s time to get to work.
First Steps After Buying A Tenant-Occupied House
Your first steps when managing a tenant-occupied property affect your overall success. Here’s what you need to do to get off on the right foot.
Collect Previous Documentation
Information is what you’ll need first. Who’s the tenant? What’s the lease? What are they paying? To find this out, you need the documentation from the previous owner or manager.
These are the documents you'll want to collect:
Notify the Tenant
Once you have all those documents, look at the rent roll to see when rent’s due and tell your tenant you're the new owner. They need to know who to pay. This is when you decide if you want to hire a property manager to handle this transition or do it yourself.
If you do it yourself, send the tenant a certified-mail notice of the change in management. Then they’ll know whom to pay and who’s holding their security deposit. We also recommend making a phone call to the tenant introducing yourself and making sure they know who to call for repairs.
FAQs About Buying Tenant-Occupied Homes
Collecting the paperwork and communicating with the tenant are the basics. But maybe you still have a few more questions about how this process works. Here’s what people ask us at LEAP.
How Easy Is It to Transition?
If all this information is available, the transition isn’t too difficult. The process becomes complicated when you’re missing one of the documents. Depending on what’s missing, you’ll need to enforce lease terms or take action to get everything up to date.
Do I Keep the Tenants?
In order to decide if you should keep the current tenant or start looking for a new one, look at the situation. Have they been paying rent on time for the past year? How many repair requests have they made? Are they paying market rent? If there’s a problem in any of these areas, you’ll want to investigate your options for making a change. (Related: How to Legally Evict A Tenant in Texas)
What Can Go Wrong?
The biggest issues arise if you don’t collect before-move-in pictures and an inventory condition report. If you don’t have those documents, you’re taking a property with NO documentation about the condition before the tenant moved in. Later, when you’re dealing with the security deposit, you won’t be able to charge for anything you don’t have proof of — it’ll never hold up in court. If you don’t have pictures, you’re guaranteeing the tenant a full refund of their security deposit.
Missing the rent roll also creates problems. If you don’t have it, you don’t know the tenant's rental history. Did they pay last month? Do they owe anything? Without the rent roll, you’ll have no way to counter arguments like “I paid that already,” and “They were going to waive that fee.”
Can A Property Manager Help With Tenant-Occupied Properties?
Whenever someone comes to us after buying a renter-occupied house, we start by collecting the documents. Then we’re proactive about getting the documentation that’s missing. They often don't have before-move-in pictures. If we can’t get them, we do an inspection immediately. We still won't have pictures of the house before they moved in, but at least we can document the condition from that point forward. Our goal is to protect the landlord and the tenants. So we get the documentation we need to do so.
If you’re buying a house with tenants in Texas, LEAP Property Management can make your transition into being a landlord a smooth one. Start by locating all the documents you’ll need, and we’ll take it from there.