Adding a multi-family building or apartment complex to a real estate investment portfolio is a major commitment. However, investors and business owners can easily justify the expense involved in the acquisition of the property by calculating the rental revenue the property could potentially generate.
New owners with multi-unit rental properties often need to make substantial improvements to the facilities to ensure that they meet all state standards. They may also want to adjust rental agreements. Increasing the amount of rent, changing policies on pets and standardizing rental agreements from one unit to another are all common practices when apartment buildings change hands.
Landlords can anticipate a degree of pushback from existing tenants who may not want to make concessions regarding their companion animals or to pay more for rent. Can the new owners of a multi-unit building evict existing tenants to eliminate old lease obligations and pave the way for more favorable arrangements in the future?
Landlords must honor existing leases
As a general rule, those taking over ownership and management of an existing residential rental property have to honor the existing lease. If the existing tenants have month-to-month leases, the new owner can remove existing tenants relatively quickly. The new owner can provide the tenants with 30 days notice of lease termination or may notify them of the changes to the lease and give them the opportunity to choose whether they wish to remain at the property or to leave.
If the tenants have a year-long lease or a multi-year lease, then the new owner typically has to abide by the terms established in the existing lease agreement until it ends. When the existing lease is about to expire, the landlord can then notify the tenant that they do not intend to renew the lease. Occasionally, landlords may be able to evict existing tenants if they have fallen behind on their rent, caused extensive damage to a unit or otherwise violated the terms of the lease.
The acquisition of a multi-unit property can lead to significant income opportunities for an investor or organization. Of course, there are liabilities ranging from maintenance expenses to existing leases to consider. Having support throughout the acquisition process and when preparing to transition to new leases can help landlords avoid unintentional legal violations. Those with support during and after major real estate transactions can limit the risks inherent in such investments accordingly.