MANAGING TENANTS DURING YOUR SALE OR EXCHANGE

Buyers/exchangers are also human beings. We as a specie make judgments emotionally as well as factually. Your tenants can have a significant impact on the price you achieve on the sale of your investment property.

Suggestions vary radically from size to type to value, but ideas for your consideration are:
  • Advise tenants of your plans. If interior inspections will be necessary or advantageous during your marketing, arrange for their cooperation and (have your agent) work with them on best times and days. Tenants generally object to intrusion in their personal or professional space for security, convenience, and privacy reasons. Provide them with form to acknowledge their responsibility for their personal property. Advise them that agent and/or property manager will be present for all showings and inspections. It may be worth your while to arrange a “Cash for Coop-
    eration” plan with your tenants, under which you will reward their cooperation at close of escrow with a stipend of $X for their help and cooperation. This can also stem obstacles they might create.
  • Invite tenants to advise you of problems. Fix, repair where reasonable.  Reassure tenants with fact that the better the property the better will be the buyer it attracts, which will mean a good environment for them.
  • Be sure your rental agreements/leases are up to date. If a tenant decides to move rather than endure the selling process, this may give you an opportunity to create a “model” unit or replace him with a better tenant and rent.
  • Recognize that problems cost money during a sale. Your options are to pay for it up front or through the price. Now allows you to choose resources and costs more independently. Document. Document. Document.
     
MANAGING TENANTS
Tenants are a valuable element of investment properties. Good tenants are very valuable, and good tenants are often a result of landlord-tenant or manager-tenant communication. Tenants in properties for sale are often skittish and even antagonistic, fearing rising rents, new judgments, and not liking having their
“home” invaded for the purposes of the transaction. A savvy landlord/seller may have managed this prior to marketing by arranging incentives for tenant cooperation, but a buyer gets what he gets.
  • During the escrow process the buyer certainly makes decisions about the property and the tenants. Make immediate communication with the tenants when the transaction closes.
  • Unless tenants are on continuing leases, rather than 30-day month-to-month rentals, most buyer landlords are wise to put their own documents in place with the tenants. Managers or owners can do this, but at least one face-to-face between owner and tenant generally makes tenants more comfortable.
  • Improvements the new landlord considers advisable are important to tenants. During investigations, tenants who have complaints are likely to have voiced them, opening doors to resolution or removal. Very often owners of multiple units have repairs/remodeling done one unit at a time to maintain the occupancy and income.
  • Having an experienced property manager who is both savvy in tenant practice and familiar with rental laws can be a dollar-wise decision. However, the internet has made a lot of information easily accessible, and landlord-tenant legal specialists are a great resource. One helpful resource is Kimball, Tirey & St.John LLP (www.ktwlaw.com). They have a monthly email of landlord-tenant Q&A information that is very helpful.