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How to Handle Inherited Tenants: Reviewing Leases, Raising Rent & More

When you purchase a rental property, it may come with tenants in place, and those tenants will suddenly become YOUR tenants. These tenants are known as “inherited tenants.” Inherited tenants can be beneficial, as you will not need to immediately spend time filling the vacant unit, and you’ll be receiving income from day one. However, inherited tenants can also be risky, as they were not put in place by you, and you don’t have a clear indication of how well they were screened or what type of tenant they are. For example, if you purchased a property and the existing tenant was three months into a one-year lease, you would be required to abide by the terms of their lease for the next nine months. Again, the leases go with the property. If the seller of the property will not let you speak with the tenants and get Estoppel Agreements, you might be dealing with a seller who is trying to hide something. In this letter we like to let the tenants know about some of the improvements that will be taking place at the property in the coming months. Related: What to Do as Soon as You Deny or Approve a Prospective Tenant Raising the Rent on Inherited Tenants Perhaps you purchase a property with existing tenants and you know that the rents are far too low. All the tenants were on month-to-month agreements, so we could raise the rent with just a 30-day notice. If we suddenly raised the rent on all the tenants, it’s likely many of the tenants would move, and we’d be left with a lot of units that needed to be rehabbed and very little income coming in to help with those expenses.