All Forum Posts by: Andy Brown

@Alyssa Lebetsamer

You're now potentially on notice of violent tendencies of one or both of your tenants. They act up again and hurt someone, there is a common cause of action against landlords called "negligent security" that Plaintiffs attorneys love to use in order to get you and your insurance involved when the next incident happens. You need to find a way to get one or both of them gone. Very good chance you haven't heard the last of it between those two either. Contact a local attorney for an opinion on the local laws.

@Anthony Vander Meer

"Mildly warm but stern" -- spot on. A letter and meeting them in person is a good approach. Just remember they may appear to you on first impression as the best tenants and the most likeable people, and maybe they are, but they're not stupid and they know how to read and play people as needed. The units may even be spotless but it doesn't mean they're going to pay on time or there isn't some kind of drug activity and "cousin Joe" living on the couch. Make sure to enforce and chase down late fees even if it's easier to say "just get it to me by Friday". Be firm and consistent. In my experience, you've probably inherited 2 dream tenants and 2 tenants that will be gone in a year through eviction out turnover. Good luck!

@Nathaniel Walker

Exactly. And we should remember the OP was dealing with D class flips on the cheap out of state. Many replies have been decrying OOS as a whole which is too sweeping. I think there are many of us on here doing fine investing out of state and just chuckle with the overbroad statements that you can't make money out of state.

That being said, the OP is still spot on and the savvy OOS investor (or let's be honest, even the savvy local investor) will either avoid those types of properties and flips or do some incredible due diligence to get a stellar team in place--but even then...

The trick to out of state investing is essentially replicating your presence in the area through your agents/team. By having a solid PM and a variety of others who are all driving by the properties on occasion, sending you pics, and allowing you to cross check each member at a certain level, you're able to create a similar accountability as to being local. What a lot of the local investors forget is how much time they waste getting elbows deep in their properties because being local hasn't forced them to establish more efficient systems--some local investors, not all.

But as far as the scenario the OP describes, I know my limits and risk level and would never attempt such an endeavor. For me, I know that I'll need to pay more for something that needs minor renovations in a better part of town, which is one easier way to mitigate a lot of what is being addressed. For that matter, I also know I wouldn't attempt a 5k purchase and rehab in my own town either.

Not that this helps Alec's issue, but this is Exhibit "A" as to why many property managers don't accept credit cards. Without reading the contract, I suspect that the pm company probably has the short end of the legal stick here.

I'm also concerned that Alec has little-to-no ability to remedy the situation as he 1) contracted and paid the pm to collect rents (which we now see that the pm has not actually done so) and 2) Alec did not charge the tenant's cc himself and does not have standing to call the cc company to push back. Further, the PM is in the best position to both prevent and resolve the issue so I'm not overly sympathetic to it. It took a gamble by accepting cc payments that a tenant would later dispute the charges. This is entirely foreseeable in the landlord-tenant realm.

I would also push back on those who have posted that simply cutting the pm a check for the difference is doing "the right thing". There are too many unknowns in this fact pattern to come to such a moral conclusion right away. My .02

@John Warren and @Patricia Steiner

Thank you both for your replies. I'm all about the relationship side of REI (I had already sent my thank you card to the lender when I found out about the account!) so I completely understand the prudence of keeping an account with them for future business purposes-- though I already had another mortgage with them. But as Patricia noted, it was the lack of communication on the issue which seemed a little Wells-Fargo-esq and bothersome to me. And the fact that I had already opened two other bank accounts for the LLC at other banks in the interim. John, I like the idea of keeping the security deposits there and will likely go that route. Talking to someone about comping the checks is also a good approach. I appreciate the replies.

I just took out a commercial loan from a bank to buy a 6 unit. Just before closing I started receiving checks in the mail for a checking account I had neither requested nor known about. Lender later says it is bank policy to have an account with them if I have a commercial loan and that he was sorry for not mentioning it. I otherwise have no bank accounts with this bank. Can anyone tell me if this is standard practice? Just seems suspicious that they "forgot" to tell me about an account they opened for my LLC that I don't want.

PS - I just received the $86 invoice for the mountain of checks they sent me and I'm extra annoyed.

@Anthony Newbold

If you take the doors and toilet I suspect they will "take" (destroy) your carpets, walls, and appliances. We already know they have integrity issues. I'd cut your losses and move on.

I had tenants stop paying at the first hint of COVID and eviction stays. Both were working and wouldn't communicate at all. Eventually in June we offered that if they just leave we'll keep the security deposit and not pursue a judgment. They agreed....and trashed the place and left. Good luck. These are unusual times.

@Mathieu Roegiers

Got a commercial quote today for 20 year loan with 5 year arm, no balloon, at 4.9% on a 6 unit. A buddy just got 4.0% on 20 yr with 5 year balloon on two 5 units.

Adding to this thread for future searches as this seems like the best thread on the topic. I'm in the same boat-- need to add fire escape to third floor attic unit in Northwest PA to get additional unit accessible. Quote for aluminum powder coated three story spiral staircase with two landings ran about $15,000. Switching to steel knocked off about $1,000 and opting for non-powder coat saves about $2500. Had stair guy, fire marshall, city inspector come out and make sure it was legit. Completely worth it to get another unit online. Pays for itself with about 2 years of occupancy.

@Joe Splitrock

Agree that education is a good start. And one on one relationships are key to changing lives--more so than any government program alone ever could. That being said, some people also can't be helped.

A few years back my roommates and I were intentional about doing life with our neighbors (racially mixed neighborhood). We did a lot of Sunday dinners, free childcare, and even rent assistance as needed. One family couldn't get their finances together no matter what. So that dad expressed an interest in coming to Dave Ramsey Financial Peace University if I paid and attended and gave him rides. So I paid, he came with me once and blew me off. Even when I was outside his house waiting to pick him up. And this is just one example of many of how this family refused to be helped when it required any action on their parts.

I think the real answer is likely as complicated as people themselves. These are good conversations to have, but it also starts with the presupposition that all people want to be helped or take actions to improve their situations. Some people, not all, genuinely have no desire to take the actions needed to improve their lives. So let's keep trying to level the playing field (if that is actually what we're doing) but remember that not all of our well intended efforts can change people.