Hacking into Property Management: What Happens When You Inherit Tenants

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Hacking into Property Management: What Happens When You Inherit Tenants

How To Deal With Tenants in Your New Home

If you just bought your first multi-family home or house hack, you might be wondering how to
deal with tenants who already live there.

Most multi-family homes on the market already have pre-established tenants living there, so
it’s not unusual to buy a house and, inevitably, inherit those tenets.

In this Happy House Hacking podcast episode, Owen and Camille Schwaegerle share their
experiences so you don’t have to make the same mistakes they made and be able to
maintain and pay for your new home and keep your tenants happy.



Buying Your First Home

Being a young person trying to buy a house in California can be pretty hard as it is, and to
also have to deal with tenants in your new property can become pretty daunting.
If this is your case, how do you deal with it, and how do you keep a cordial relationship with
them?

Before dealing with your new tenants, these are the main things you need to be aware of.

Get Familiar with Your New Home

One of the first things you should do is familiarize yourself with the current rental structure
and the living situation of your tenants. How much are your tenants paying? How long have
they lived there? Etc.

Rent Increase Limitations

In many jurisdictions, including California, there's a cap on how much you can increase the
rent each year.

In California, you can only increase the rent by 5%, plus inflation. It's important to be aware
of these limitations to avoid legal issues down the line.

Existing Rules and Expectations

Remember that your tenants have probably been there longer than you. The rules they are
used to might be different from what you expect.

For instance, there could be restrictions on pets, smoking, or renovations that you weren't
initially aware of.

Likewise, your tenants may have certain expectations based on their previous interactions
with the former landlord.

Tenant-Landlord Laws

Familiarize yourself with local and state laws pertaining to landlord-tenant relationships.
Understanding these laws will help you protect your rights as a landlord and ensure fair
treatment of your tenants.

Build a Healthy Relationships

Now that you have a clear panorama of your new home, tenants, and laws, how do you build
healthy and functional relationships with the people living on your property?

Now Their Rights

In California, while you have the legal right to sell a house with tenants living in it, you must
uphold the terms of the rental agreement. What does this mean?
This means that tenants have rights, and these rights are attached to the house, not the new
owner. This means that the existing lease remains effective even after the property has been
sold.

It’s essential you ask, know, and work with these leases beforehand to avoid any problems
or friction with the tenants you will inherit.

Respect Their History with Your New Home

As a property owner, it's important to respect your tenants, especially those who have been
residing in the property for an extended period, such as over six years.

They may have been living in the property longer than you've owned it, creating a deep
sense of home and attachment.

Acknowledge this with respect and understanding, as it can foster a harmonious relationship.

Boundaries

Clear boundaries are essential, especially if you're also residing in the same property.

Maintain a professional demeanor, ensuring that tenants understand the appropriate times
and methods for contacting you.

This prevents unexpected interruptions and helps preserve your privacy while remaining
available for tenant needs.

Give It Time

If changes need to be made to rental terms, rules, regulations, leases, prices, or payment
methods, ensure these are communicated clearly and with ample notice.

Transparency in these matters fosters trust and can prevent misunderstandings or conflicts
down the line.

How To Deal With Tenants with Clear Communication

Decide on the preferred methods of communication. This could be through email, phone
calls, text messages, or even a dedicated property management app.

Ensure these channels are reliable and accessible for all parties involved. Be sure to provide
clear instructions on how and when to use each method.

Put Business First

While it's important to be empathetic towards your tenants' circumstances, you must also
safeguard your business interests.

Being a successful landlord doesn't mean you can't be kind and understanding. In fact,
showing compassion can lead to stronger relationships with your tenants, promoting long-
term tenancies and reducing turnover. However, it's crucial to balance this compassion with
your business needs.

Implementing and enforcing rules is a key part of property management. This includes
policies on late fees, property damage, and lease violations.

While it may feel uncomfortable initially, being firm with these rules is necessary to maintain
order and respect within your property.

Keep Listening to the Happy House Hacking Podcast

House hacking isn't just about owning a home. It's about building a life of financial freedom
and independence.

Make sure to subscribe to the Happy House Hacking Podcast for more tips, tricks, and
insider secrets in the world of real estate.