I just bought a property, when should I approach tenants for a buyout?

There is no right or wrong answer. However, you need to know your tenancy. Older or long standing tenants like to get to know management/ owner before being approached with a buyout.

I had some units I was working on buying out. The Owners wanted to buyout tenants right away because they wanted to start work on the property. I sent out the offers and did my follow ups. One of the tenants emailed back explaining how she had lived there a long time and did not know who the new management company was or even the new Owners. She knew the prior owner on a first name basis and was hoping for at least an introduction phone call from the new property manager. I think that eventually came, but not before my offer letters went out.

In modern times, most investment property owners want anonymity as much as can be afforded with real estate. Tenants do not tend to meet their new landlord, and deal strictly with management. That is fine. But the key component missing for this tenant was the formality of “hello, my name is X and I am here to manage the property and address any day to day matters of this building.” It costs nothing to do an intro call with tenants if you are the new owner or property manager, and you may even get some insight on the tenant’s ideas for their own future at the property.

The etiquette of the transition from old owner to new owner goes a long way with tenants that are older or even just legacy (perhaps not 60+ but nonetheless long standing). Sometimes my clients have years of rapport with a tenant but do not have the stomach or patience to negotiate a deal. Out of respect for the tenant my client will give the tenant a heads up call that I will be sending them an offer, it is legitimate, but to go through me for those discussions. It sets the tone, removes the “surprise” factor, the tenants start percolating ideas of where they may want to move or what changes may be in store, and drastically increases the chances the tenants will take my calls.

There is a lot of pent up tension boiling between landlords and tenants in California, but there is no amount of legislation that can remove the human dynamic of civility. If you are cordial with a tenant you may find they show you the same. And maybe even be a bit more open to hearing what you have to offer.

The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.