Inevitably, you\u2019re going to come across some deals that have renters in place<\/strong>, but whether you want to keep them on as tenants is up to you. During this time of eviction moratoriums<\/strong><\/a>, you may be questioning whether or not an inherited tenant<\/a> is worth the hassle. Here\u2019s what Tony and Ashley<\/strong> think:<\/p>\n If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group<\/a>! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).<\/p>\n Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: \u00a0<\/p>\n \u00a0<\/p>\n<\/div>\n -tenant software and app means you can collect rent payments, list units, screen tenants, and manage maintenance from the car, the couch, or the phone in your pocket.\u00a0<\/p>\n \u00a0is all about helping new landlords manage their business and be happy customers.\n<\/p>\n For a limited time, you can sign up with referral code\u00a0BPROOKIE<\/strong>\u00a0and get their annual plan for just $1. Go mobile and manage your properties from anywhere at\u00a0RentRedi.com<\/a>.<\/p>\n \u00a0provides fully renovated Turnkey properties in Memphis, Tennessee. With in-house property management, their Turnkey model allows you to passively grow your rental portfolio with properties in one of the best cash flowing markets in the country.\n<\/p>\n \u00a0gives you the tools to set up your management process and increase your ROI as you grow your portfolio. Why give away 8-12% in Property Management fees if you don\u2019t have to? TurboTenant is completely free for landlords! In 5 minutes, post your rental on dozens of listing websites like Facebook Marketplace and Rent.com. Then, use their extensive application and screening report<\/p>\n \nto feel confident about the tenants you choose. When you find the right tenant, use one of our State-Specific leases or upload your lease to get it e-signed. Collect your security deposits and monthly rent, all within TurboTenant.\n<\/p>\n See why over 300k landlords rely on TurboTenant to manage their rentals while making passive income and living the life they want. You\u2019ve got nothing to lose; it\u2019s FREE! Head over to\u00a0turbotenant.com\/rookie<\/a>\u00a0to learn more.<\/p>\n Scout offers a 7 day free trial so you can test out their software, and cancel anytime you\u2019d like with no obligation. Go to\u00a0scoutproperty.co<\/a>\u00a0and sign up for a free trial.<\/p>\n
This is Real Estate Rookie episode number 84.
I\u2019m Ashley and I am here with Tony Robinson. We are your co-hosts of the Real Estate Rookie podcast and today we are back with another episode of The Rookie Reply.
Tony, what is going on today?<\/p>\n
Life is good today. I can\u2019t complain. You know what? Actually, I haven\u2019t told you this yet, but I got recognized in person for the first time by a Bigger Pocket audience member. I was at my brother-in-law\u2019s restaurant-<\/p>\n
You can say fan. It\u2019s okay.<\/p>\n
I was at my brother-in-law\u2019s restaurant. He owns a restaurant here in SoCal, and someone comes up to me and they\u2019re like, \u201cHey, are you Tony Robinson?\u201d And I\u2019m like, \u201cI am Tony Robinson. How did you know that?\u201d And then yeah, he said, \u201cOh, I listen to the podcast.\u201d<\/p>\n
Are you sure they didn\u2019t say, \u201cAre you Tony Robbins?\u201d<\/p>\n
He was like, \u201cAren\u2019t you Ashley\u2019s co-hosts? I can\u2019t really remember what your name was, but\u201d-<\/p>\n
Oh, that\u2019s exciting. That\u2019s so cool. I bet it was really nice to talk real estate a little bit with him.<\/p>\n
Yeah, just for a little bit. Yeah, it was cool.<\/p>\n
Cool, cool. Yeah. Let\u2019s get into our Rookie Reply today. Today, we\u2019re going to be talking about inherited tenants and what it is like when you purchase a property and there\u2019s tenants already in place. Today\u2019s Facebook question, now we pulled it from the Real Estate Rookie Facebook group, so if you are not a member, make sure you search Real Estate Rookie on Facebook and join our group. We are continuously growing every day. Tony, what are we, around like 30,000 members?<\/p>\n
Yeah. We\u2019re a little over 30,000 I think now. It\u2019s creeping up every day. And what\u2019s more important, guys, is that it\u2019s a very active group as well. Ashley and I talk about this. Sometimes we try and go into the group to add value, but so many people have already commented on posts that there\u2019s not even a whole lot for us to say that hasn\u2019t already been said, so super engaged in an active group for sure.<\/p>\n
Okay. Today\u2019s question is when you purchase a property with a tenant already in the middle of their lease, can you increase the rent or do you have to wait until their lease is up?
That\u2019s pretty straightforward answer is depends on the lease. Is it a month-to-month lease or a one-year lease or a two-year lease? If their lease is not up yet, you have to wait until their lease is up. If they\u2019re on a month-to-month lease, you can give them notice that you\u2019re going to increase their rent or you can give them notice that when their lease is up, you are going to increase it if, say, they have six months left on the lease.
And look at your state laws, because some states like New York state, they have different requirements as of the time period for you to give notice that you\u2019re not going to renew a lease or that you are going to increase the rent. I believe \u2026 I don\u2019t know exactly, but it\u2019s something like if the person has lived there for less than a year, it\u2019s 30 days notice. If they\u2019ve lived there for two years, it\u2019s 60 day notice. Any longer than that, you have to give maybe 90 days notice. Make sure you know, your state laws and regulations, too, when you are giving notice that you\u2019re going increase the rent.
Tony, what do you have to add?<\/p>\n
Yeah, I guess the only thing I\u2019d add is that sometimes there are situations where maybe there isn\u2019t a lease in place, right, like the owner, the landlord, their current owner doesn\u2019t know where it\u2019s at or can\u2019t remember what it was. And I haven\u2019t purchased a property where I\u2019ve inherited a tenant, but in talking with some of my other investing friends, one of the things that they use is called an estoppel agreement. And basically you just get the current party, so the owner, the landlord, and the current tenant to sign this estoppel agreement saying, \u201cHey, here\u2019s where we believe the current terms of the lease to be.\u201d That way, when you step into it as the owner, you\u2019re not surprised by, \u201cOh, the owners told me that this was what was happening, but the tenant thinks that this is what\u2019s happening,\u201d and then you\u2019re stuck in between a rock and a hard place, so an estoppel agreement as a way to get past that ambiguity.<\/p>\n
Do you want to spell that for us real quick?<\/p>\n
Yeah. I actually had to look it up too because I wasn\u2019t sure either, but it\u2019s E-<\/p>\n
No, it\u2019s E-S-T-O-P-P-E-L, right?<\/p>\n
Oh, there you go. All right, you got it.<\/p>\n
Yeah, no, I have used these before, and I\u2019m so glad you brought that up. I didn\u2019t even think about that, but that is such great advice. And you can just Google it online. That\u2019s what I did when I used one. But yeah, it is great to verify what that seller is telling you, especially if they don\u2019t have a written lease. That\u2019s such a great point.
And you can do that before closing. Ask the seller\u2019s permission to send these and you send them to the tenant and you have them mail them back to you directly or maybe you meet them in person, but that way you\u2019re getting a sense of what they think that their lease terms are and what they say so that if there is a mismatch of information from the tenant and the seller, you can figure that out before you actually close on the property, because there\u2019s been instances where I\u2019ve taken over management of a building and they\u2019ve said, \u201cWell, my security deposit was this much. I put this much more down,\u201d and I actually had to pull out the estoppel agreement and say, \u201cHere, you signed that it was this amount way back then, even though you didn\u2019t have a lease agreement with that landlord.\u201d Definitely can be very useful to you, and also getting the condition of the property, too.<\/p>\n
Yeah, always good to just CYA and make sure you\u2019re covering all your bases in that sense. Ash, I guess I want to get your opinion on something, right? Right now we\u2019re still in the middle of this pandemic and there\u2019s still a lot of eviction moratoriums going on in places. Would you be more hesitant today to purchase a property with an inherited tenant than you would be early 2020?<\/p>\n
Let me tell you a quick little side story first. I saw this news article, and it was from a Lancaster, which is outside of Buffalo, New York, and a landlord had two tenants inside that were not paying rent and so he spray painted their names on the roof so that everybody that drove by could see that, \u201cSo-and-so owes me $11,000 in rent,\u201d and it made the news and it\u2019s a big controversy like, \u201cWas this right for him to do or not to do?\u201d But yeah, our property management company had sent an email to the owner recently just saying, \u201cThis is going to be really detrimental to a lot of landlords not getting rent and not being able to evict.\u201d
For me personally, if I was buying a property with inherited tenants, I would do the estoppel agreement and I would ask the seller, \u201cWhat\u2019s rent at?\u201d And that\u2019s something to put on the estoppel agreement, too, \u201cWhen\u2019s the last time you paid?\u201d And you can also ask for bank statements to verify that the tenants actually did pay. If they were paying tenants, I would purchase the property. If they were not paying tenants, I would look at, am I getting a deep, deep, deep, deep discount and can I offer them cash for keys, give them $1000, pay for them to get a U-Haul and help them move somewhere else? That would be my take on it, but I definitely wouldn\u2019t stop buying or stop looking at properties just because there was inherited tenants in there.<\/p>\n
We\u2019re looking at a property in Joshua Tree right now off of direct-to-seller marketing that we\u2019ve been doing. And the owner lives, I don\u2019t know, somewhere on the east coast, and he\u2019s like, \u201cHey, you guys can have the property for almost whatever price you can figure out if you can get these squatters out of the property.\u201d He was like, \u201cI don\u2019t really know how long they\u2019ve been there.\u201d He\u2019s got no grasp of what\u2019s actually happening there. We\u2019re going to see if we can, like you said, maybe offering some cash for keys to get out, and then we will get the property at a pretty steep discount because he just kind of wants it off his hands, so ways to be creative.<\/p>\n
Yeah. You have to keep us all updated on this and how this pans out for you.<\/p>\n
We\u2019re also a little nervous to go to the property because he doesn\u2019t even really know who these people are. Are they going to try and run us off when we get there?<\/p>\n
Right. Oh yeah.<\/p>\n
Yeah, we\u2019ll see.<\/p>\n
Huh. Well, be careful.<\/p>\n
If you guys see me posting on my Instagram story running out of breath in the desert hills of Joshua Tree, you\u2019ll know why.<\/p>\n
Doing your last testimonial on Instagram Live. My name is Tony Robinson. It is May 25th at 4:00 PM. I\u2019m being chased through Joshua Tree.
Okay, well, we\u2019ve gotten way off track for today\u2019s Rookie Reply, but we hope we gave you guys a little bit of tips, tricks and advice for dealing with an inherited tenant, but do not be scared of an inherited tenant. If you\u2019re going in and you\u2019re looking at properties before you\u2019re purchasing, you can see if they\u2019re taking care of the property. You can talk to the neighbors to see if they are a problem tenant if issues do come up, if the cops do come there. There\u2019s definitely ways to do your due diligence because buying a property with tenants in place can be really nice because you\u2019re getting that cash flow right away and you don\u2019t have to place a tenant in there.
Hey, anything else Tony?<\/p>\n
No. No. I think you hit it all, Ash. I feel like we gave them a lot of good stuff today.<\/p>\n
Thank you guys for listening to today\u2019s Rookie Reply. I am Ashley at Wealth From Rentals and he\u2019s Tony at Tony J. Robinson. And even though he was just spotted recently, he did have another huge compliment here. David Green, host of the Bigger Pockets real estate podcast, complimented him on his smooth voice.<\/p>\n
My smooth DJ radio \u2026 Hey ladies and gentlemen. No.<\/p>\n
Which I 100% agree. Well, thank you guys and we will be back on Wednesday with another episode.<\/p>\n![\"Scout\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/06\/Scout.png\" "\\"Rookie")
<\/picture>Scout<\/strong>\u00a0is a valuable tool real estate investors and wholesalers can use to look up property information, save and organize properties, and get property owner contact information (such as phone number, email, and mailing address) for free. More than looking up property information such as tax information, parcel ID, property owner information, sales history, and more, it helps you stay organized, and staying organized is a crucial part of being successful in real estate. Scout also allows you to look up properties on the go, that way if you\u2019re driving past a distressed property, you can pull it up on your phone, save the property, and even write a note on the property to help keep you organized.<\/p>\n