Buying a Duplex With Tenants: How to Handle It
Hey, you guys. Carter here with Century 21 and Crowley Real Estate, and today we’re going to be discussing buying a duplex with tenants in the Appleton, Wisconsin, area or surrounding communities. The first thing that you need to take into consideration when buying a duplex with tenants is are the tenants on a month-to-month lease or are they on a term lease?
A term lease means that it’s either for three, six, nine, or 12 months, and that term lease goes with the sale of the property. An example being, say a property was rented out on a year lease in January and you bought it in May. Well, the year would continue until the following January, and you would not be able to change that tenant’s lease terms or lease provisions unless they did something wrong within the terms of the lease and you could evict them or kick them out, so that needs to be taken into consideration.
Month to Month Lease
If the tenant is currently on a month-to-month lease, then you could give them a 28-day notice to vacate if you did not want them in the property when you’re purchasing it or if you wanted to remodel their specific unit. So ideally, when you’re buying a duplex with tenants, it’s always nice to have tenants on a month-to-month basis, because then you can decide if you want to keep them or kick them out.
But again, verify, go back to their original lease that was probably in place to see if there is any sort of stipulation on when you can give them notice to vacate, because I know living here in the Wisconsin area, from months November through March, typically people do not want to move during the winter or they do not want to vacate the unit during the winter, so that just needs to be dictated ahead of time. But that is one of the benefits to buying a duplex with tenants is, on a month-to-month lease specifically, you can decide what you want to do with them.
What Are the Rents?
Another thing to take into consideration when buying a duplex with tenants is how much rent are they currently paying. Is it at the market rate rent or is it below market rate, and what is all included in their utilities? If you’re inheriting tenants from another landlord, they might be use to how the other landlord did things, and you need to set the terms up front on how you’re going to manage the property and what expectations need to be met throughout that management timeframe.
When you first purchase the duplex, I always recommend sending the tenants something in the mail or going to introduce yourself, and let them know how things will be changing and if they will be expected to vacate or their rent will be expected to increase. That’s always the best-case scenario. Some tenants will take offense to this, others will understand that they’ve been getting a deal for the last one, two, three years if they’ve been there quite some time and that the market rate rent is definitely higher than what they’re paying.
How Can I Help?
If you have questions on buying a duplex with tenants, or if you need help with the process of buying your first duplex, reach out to me or fill out the form down below. You can also give me a call or text on my cell phone, which is (920) 252-2864. Best of luck searching for your first duplex. Let me know if you need help.