Management

You have bought a tenant-occupied property but don’t know much about property management

Uh oh. However, it is not common.

Let me begin by saying this: It is possible to manage your own properties from the beginning.

Why?

You need to be familiar with the laws and know what you can and cannot do as a landlord. You might decide to hire a management company instead of managing the properties yourself. *Warning* – if you don’t understand property management, you won’t know how to hire a property management company or if they’re doing a good job. I can confidently say that most property managers are bad.

Let’s now get to the issue at hand. There is a tenant in your property!

1. You should have received the contracts and tenant deposits from the previous owner when you purchased the property. You are likely to make a mistake if you don’t have the contracts and deposits from the previous owner. If the tenant claims that they had a contract with their previous owner but they claim they don’t have any deposits or contracts, they should be able to provide copies. If they are unable to produce a contract, then there is nothing that will bind you to any prior terms.

2. You should have received the tenant deposits. This is because you need something to pay for the repairs they will need. Plus, any deposit they paid to cover unpaid rent or damages, you must reimburse them.

3. Legally, you are bound to honor any previous contract or terms the tenants have (again, provided that you have a copy). The tenant is protected by consumer protection laws and you are bound to their agreements until they expire.

4. Send your tenants your new contract immediately if there’s no contract. They can sign or move. Then, you will manage your property according to the terms of your contract.

5. Management of tenants and owning a property are two completely different things. Tenants will require you to learn property management. My book, The Essential Handbook for Tenants, can be found on Amazon. It is a fantastic starting point.

The property is yours – you are the owner. Good contracts are essential. You should also be familiar with local laws and how tenants can be managed.

6. If you decide to hire a property manager (PM) company, be aware that they will manage your paperwork and follow your rules. My experience with PM companies was that most owners came to the company with their own signed contracts and rules. Some allowed pets – some didn’t; some allowed smoking – some didn’t, etc., etc. We followed the owners’ rules. It is your decision what to do with your property. If the company is good, the PM company will enforce your rules.

The contracts are the basis of managing properties and/or tenants. Your local laws. Each state is unique. Know your laws.

Renting out properties can also be a business. If a tenant is “bad”, including behind on payments, evict them immediately. I will listen to the reasons of tenants, but they are still right. You can’t bend the rules for any tenant.

Do you remember buying a property that had a tenant?

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We are a team of professionals with each having two decades of experience in start-ups, sales, marketing, finance, HR, large scale project and profit centre management and running mature cross functional operations. At Molw.net we are big believers that knowledge transfer is critical to our industry’s evolution. We love to share our experiences and learnings through our online resources.

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