All Forum Posts by: Al D.

Being that this is your first deal, you didn’t ask, and no one has brought this up along with their good answers to your question: Have you found a lender willing to lend to an LLC/other business entity? Also, your assumed interest rates may be too low today for a condo with 20% down, even in Manhattan.

NPR’s Terry Gross interviewed the Princeton professor behind the website today: https://www.npr.org/2018/04/12/601783346/first-ever-evictions-database-shows-were-in-the-middle-of-a-housing-crisis

George Loveless , in terms of any special taxes, there is something called Regional Income Tax Agency in the NE part of the state. Here is the current list of cities: http://ritaohio.com/Municipalities I am rather sure that the list has only been expanding over time. As a person/entity who earns rental income in any of these jurisdictions, you are required to file a return not only for the state, but also for RITA. There may also be other specific requirements for rental properties in some jurisdictions - the list is clickable for more info on each jurisdiction. I do not have local PMs, but would expect them to know all the nuances. I have a friend who bought multiple properties in various Cleveland suburbs, and the agent, the broker, and the title people were clueless about RITA. But the word is spreading, at least by me.

Does anyone have any experience with them? The company is in Indianapolis and run by Rodney J Gaard, who goes by Joey.

Jeremy Henry Since someone decided that my original post was “political,” (I mean, I can see how. But it was also factual - and to the point. But ok.) let’s try this again, without any “politics:” For anyone who forgot what you asked: You asked, “At what point and to what extent is a strategic default (or multiple defaults) a viable option?” While I cannot tell you what your “technical” options are, I must say this: Under Article I (One) of the US Constitution (so, a long time ago, when They were still thinking about ensuring justice, tranquility, common defense, etc., They also thought of this concern,) Congress is responsible for establishing laws on the subject of bankruptcies. They’ve been doing that ever since. You have that option today. You should not care whether someone may see it as harming your reputation, jerk-like, etc. These people are not you. I’ve never done this. Would never want to. In fact, I was on the “receiving end” of a bankruptcy once - my large business investment was completely wiped out. My reputation is certainly important to me. So is not being a hypocrite. When the law allows you to do something - and you’ve used up all other “viable” (for yourself/your family) options, this is still an option. I don’t know who your mentors were. I wish we’d spoken before you made the investments. But you are where you are today. Strategic defaults happen. People and businesses recover from many of them. You don’t have to be called a jerk for that. Best of luck.

Kim Herrick , I think that my sellers were very frustrated with me since before this issue came up, like when I realized that the way that how their listing agent described the properties in the package was a night and day difference to the reality of the properties’ condition. The sale still made sense, but at a lower price. I asked for it. They practically felt indignant for being asked for another discount after first giving me a large discount to the original asking price. I kept it “business,” and got what I needed. I practically apologized to them for their agent being a liar. If you don’t have an agent working only for you (not a dual agent who also represents the seller,) you always should. If you did not get an inspection (especially if it is a contingency in the contract,) get one. I’ve seen too many people “omit” facts in Disclosures, and later pretend they knew nothing. If you feel that the sellers have lied to you about something already, there may be more that you can’t even begin to imagine to suspect yet. Raymond Y. ‘s suggestion of either of the two points is correct. I hope that you are not represented by the seller’s agent, and that your contract has the right contingencies in it. Remember, anything can be negotiated. Unless you are in a hot sellers market (for duplexes,) the seller must consider the possibility of how much they may lose if the property goes back on the market. You are a bird in the hand - they should treat you as if you could fly away at any moment.

Kim Herrick , I recently had an estate sale package with - surprise the day of the scheduled closing - one tenant being behind on rent. While the listing agent said that I should close and then evict, I said no. (She said a lot of things, and I hope that she gets to read my “fond” memories of her that come up here and there, as she is a member here. But that’s not important here.) I had the sellers deal with that first - before the closing, which was put off by another couple of weeks. Check you purchase contract; you should be able to “stall.” This is not something that you did. Have the seller (“estate”) deal with the issue. You don’t want to find out later that there was no written lease, no provision in the lease for heirs (that would be you,) etc. - unless you have a copy of the lease and know it’s real and covers any potential pitfalls. I am talking worse case: good lawyer repping the tenant, “liberal” jurisdiction, etc. - cover yourself while you can, or demand a lower price. @Raymond Y, I am not a lawyer, but, if you intend to make a credit check as part of your screening of (pre)existing tenants, I am not sure that you should - “credit” had already been extended to them, and they may still be covered by that original contract. Maybe I am overthinking it. Good suggestion on asking the seller to lower the price.

Caleb Heimsoth , you just asked interesting questions that made me look at the tenant’s application and compare it to the public eviction records for him that I had not had the chance to do since getting the app yesterday. I discovered something interesting that certainly makes me wonder more whether MSHB did any DD before placing him. But to answer your questions in order: The purchase price was $74,000 (rent $795.) (Note: I just checked Zillow to remind myself of the purchase price - the property is not listed for rent there, only on the MSHB/MSBR website that I know of.) (Note to self: Really? Still?! Time is money in this business. I know that they, allegedly, have a lot of “foot traffic” to their office, but... it’s my money.) So, did they do a background check? The “discovery” I made after your question is the following: The most recent prior address the tenant listed in his app with MSHB was the address where there is a public record of his eviction in 2009. He listed that address as his address for the previous 8 years (the MSHB app was filled out in October of 2016.) But, as I previously stated, public records show him getting evicted as “recently” as 2011 from a different property. He did not list that residence at all. He also left “Why are you leaving?” blank. Additionally, he did not list any personal or credit references (or emergency contact, or additional occupants, including children - it’s a 3/2 - or vehicle information) in his MSHB application. And - as MSHB provided me what appears to be the whole onboarding package yesterday (except for the credit report - if any - but I don’t want it anyway,) the page titled “Rental Verification” (and is apparently for prior landlord to fill out during the verification process) is absolutely devoid of any information. Therefore, I just don’t know how else to answer your question about whether they did a background check on this tenant, other than to say: Not likely - based on the “evidence” I have been given so far. All I can say is that, just as you stated, some of the blanks in the app, and especially in combination, and especially in combination what what I can only imagine must have been on the credit report (I am speculating, but basing on personal experience,) should have raised a number of red flags. I may or may not bring up these concerns to MSHB (probably will.) I hope that they read these posts, and can tell me that I just don’t have all the info. I’m really pulling for them - I kid a lot on this site, but not this time. Also of note (and I don’t hold this against MSHB; although, given the number of times they must have had personal contact with the tenant in the last few months, they probably should have picked up on this:) The after-eviction walkthrough video that MSHB sent me caught a glimpse of a doghouse in the backyard - the tenant left a lot of piled up “personal property” outside, and the doghouse stuck out like a sore thumb, even as the camera panned very fast. No pets were allowed in the property. At this very moment, I am dragging my feet on calling a prospective tenant for a property I self manage - I don’t think it’s going to be a nice conversation, based on the blanks in her app. I will try to be as forward as possible in my questions to save her the $39.99 on Cozy - and she knew my standards when applying. Sometimes the blanks can be innocent, but she also revealed other info of concern in the app. We’ll see. I won’t have anyone else to blame if this should turn out to be a bad tenant. I’ve come a long way in my “standards” since accepting this applicant’s sister in 2010 by allowing her to bring her own recent credit report to my rental open house to save her money. I did not know about Cozy, or this site, in those days. This site is a nice relief, and from my 9-5, too.

I have sung praises about MidSouthHomeBuyers here in the past. I can no longer do that. In fact, I must update the facts of my experience: I find it interesting that Daniel Mills (above) “immediately” gets an email if a tenant doesn’t pay or is short. Unfortunately, that has not been the case with me, and it may take days, and another email from me, before I may get a reply. But I only own two properties with them. The purchase process was great. I found them all to be great people. I found their (stated) processes to be wise (and, of course, legal.) I found their rehabs to be of high quality for the price range. I’ve been out there to meet them twice. My first tenant (placed in 11/2016) was late for the first time (that I knew of) in 4/2017. MSHB let me know fairly soon about that. The tenant caught up, and all was well again. But in 11/2017 I got an email that MSHB was planning to evict him: He was late for September, paid, then paid for October, then one or both of these payments were found to be some kind of fraudulent and had to be negated. We were now in November - and this was the first time I was hearing about that. I immediately approved the eviction. The hearing was not until early December. The tenant lost, promised to pay, paid, was allowed to stay. Then he defaulted the next month - but I still did not know that. In fact, I reached out to MSHB myself in late January - that is when I first heard that the tenant had not paid for January, but was going to... MSHB got him out the first week of February (there was no need to go to court again.) I am looking at a $1,300 make-ready bill and arrears for rent against a $500 security deposit. Could have been worse, I know. But what upsets me here is that, when I asked for the make-ready estimate, MSHB told me that it would be provided on a particular day - it was provided five days after that day. I did not set the original deadline. Since I have another local PM who manages six other (not turnkey) properties for me, and my contract with MSHB allows for a 24-hour cancellation of the MSHB PM contract, I wanted to see how much my other PM would charge for the make-ready - without him wasting his and MSHB’s time to show him the property. Even though the $1,300 estimate was provided to me two days ago, it still does not have the breakdown of costs. When I inquired about that, I was told that due to the recent multiple burst pipes (cold snap) in properties under management, MSHB is still catching up. What that also means to me is that no make-ready work has been started - the place has been sitting unoccupied (but advertised) for over two weeks now. I can understand the “Act of God” situation. I can absolutely forgive the need to prioritize fixing pipes for other owners over a make-ready for myself. But I have a hard time forgiving the communication issues that I have been experiencing with this PM on an ongoing basis for a number of months now. They are not alone in this - but I had given them high marks previously. To make matters more interesting: When I learned that we needed to evict, I checked the tenant’s name in public records - he had two prior local evictions (2009 and 2011 - perhaps far enough back for a 2016 application to be ok.) Since I intend to go after the tenant as his creditor (he has a job, and I have a track record of success in “offer and compromise,”) I asked MSHB for the original application. The tenant marked whether he (ever) had any eviction as “no.” I do not know whether there may have been any additional scrutiny over this by MSHB at lease-up. What also irks me is that, if this eviction had gone through before late December - and it could have happened as far back as September/October - I would have been less than one year into this property’s ownership, which would come with some financial benefits to me. I understand that PMing is an art. Some tenants default, but then catch up and stay current. I would not argue the extended goodwill toward this tenant on the part of MSHB, as I have to trust each PM to “feel” the tenant on my behalf. I’ve been wrong, too. I am just not happy with communication. (The other MSHB’s property I’ve owned since 9/2017 appears to be staying current.)

John Sanderson , you are correct about what “notarizing a document” is for, which is why I suggested that to the OP after the very first commenter here pointed out that documents can be falsified. Someone else suggested having the prospective tenant go to the county’s tax website to verify the property owner’s identity. But that may be useless in California - unless the OP had requested that his ownership information be made public ahead of time. And, I would think that most people would prefer to keep that information less-easily accessible. So, what, then, to do in California, short of having the tenant go to the tax office in person? Obviously, signatures, too, can be forged. That is why I suggested the notary option: that is where leaving one’s thumbprint can speak to the true identity of the signer, should that be needed later. That “raises the stakes.” The OP is from California, did not say that the property(ies) is in another state, did not suggest that this would not be done in person, so I was left to presume that this would be in California. What’s at stake? Here, we have Section 470 of the Penal Code. For anyone interested, look it up. The OP can have the prospective tenant look it up online, and also ask the notary (from a “neutral” business location - not a possible friend of the OP) to explain what notarizing a doc means. If the prospective tenant would not be satisfied by going with a notary after reading 470PC (a felony, or at least a wobbler,) on top of the very acceptance of money for the property under false pretenses being a violation of 470PC (but criminals get away without being positively identified all the time) in itself, I’d, then, say that nothing would satisfy the tenant. I imagine that just mentioning the notary - without having anyone read the legal statute - should be enough. Some foreigners even (mistakenly) view notaries as lawyers. I can’t speak for other states’ notarization requirements, but here we take the thumb, a requirement for most real property transactions, and always suggested in any case. (Did you know that identical twins share same DNA, but their fingerprints are not identical? Not important for this discussion.) I never said that this would be the best suggestion for the OP. It’s just a suggestion for California, as some of the good suggestions above may not work in California.