Continued lessons in RE investing

[Jak Dadi]

Our 5th offer was recently accepted...well..we made close to 8 offers in the last month and this was the only one that was accepted....all the offers were above asking price, but I guess the market was heating up in East Bay. If we close on this triplex it will be our fifth property, assuming we also close on another triplex that has been in escrow for over 2 months.
As we try to become smarter about RE investing...some common questions pop up
- maintenance work is done by folks who are individuals...how do u cover yourself if any injury happens during the work...or do u work with contractors who waive any liability
- we had someone collect the rent earlier but now are insisting that tenants mail the rent to PO box. How do u enforce late fees?

[J Scott]

1. Personally, I don't let any contractors step foot onto my property unless I have proof that they have both liability insurance (to cover any negligence on their part) and workmans comp insurance (to cover any injury on my property). This insurance needs to cover them and any of their workers, and their subs need the same.

If a contractor gets hurt/killed on your property and they aren't properly insured, you risk a lawsuit that can potentially take this property, other properties and/or even your personal assets (depending on how smartly you protected things).

It costs a little more to hire contractors who carry insurance, but it's well worth it, in my opinion.

2. You enforce late fees the same way you enforce the rent in the first place. You make sure that the details of the fees are in the lease/contract the tenant signs, and if they don't pay the fees owed, you evict them (just like if they don't pay the rent owed).

In fact, it should be stipulated that rent payments from future months be applied first to outstanding balances, so in reality, they will be short on their rent payments, and not on their late fees (in other words, the rent payments cover the fees and then they are short on rent).