All Forum Posts by: Richard F.

Aloha,

I would say first of all to get an understanding of Real Estate "Agency" laws for your state. You need to know exactly who the "Agent" is working for, and what their legal constraints are in that regard.

Aloha,

Your Agent failed you if it was not specified in the purchase offer, as a special contingency, to not renew existing tenants for more than a Month-to-Month term.

At this point, depending on how thorough you were with inspections and planning with regard to the occupied unit, perhaps have Code Enforcement visit and declare it uninhabitable. If you were planning "major work" anyway...

Alternatively, if your contractors work day AND night on the other side, and you give the Tenant written notice now that they are terminated as of July 31, 2024, BUT that you are willing to allow them out of their Agreement without penalty, and they do not have to clean anything, AND you will refund 100 % of their Security Deposit. Maybe they will take the hint.

Aloha,

Terrible idea. Why give away money? Charge full market rent. What if the Tenant "loses track" of when they WILL need to make a payment again? Do you plan on sending reminders ahead of time, or just chasing them once they are late? How do you know they will have adequate job/resources a year from now to be able to pay? What if they have a life event occur any time over the next 12 months, and need to vacate, or if they die? Will you have their funds set aside so you can return unused funds based on local laws, or will you likely have spent it and need to scramble to raise funds?

The Rental business, especially financially, largely revolves around 30 day cycles, it is best to stick with that.

Aloha,

No, absent a recall notice from manufacturer, that is what Renter's Insurance is for, among other loss issues. Although, I would question why they would not replace all of the breakers in a single panel at the same time, if they have been that problematic.

Aloha,

It will really depend on what their current Rental Agreement states regarding (or not) the garage space. If it is not specified in current agreements, check local laws for proper notice requirements, and post notices on the garage and each unit entry door. Since they have been using the space for so long, I would probably give minimum of 60 days notice, if allowed.

Plan on having to dispose of a lot of crap that no one claims. Hopefully there won't be hazardous materials...

Your options are frame out, or fence off, defined spaces to rent for an additional cost, and with certain rules and consequences for not abiding. Even if they are for parking, on multi-unit properties the parking/storage space agreements are separate from the residential Agreement. In most states, these spaces, if separately contracted, do not fall under the Residential LL/Tenant laws, which makes dealing with slow/no pay or other issues for the space much simpler. It also gives you leverage if the Tenant is causing issues on the Residential side. You can just terminate the storage/parking agreement which may motivate them to vacate the residence as well.

Aloha,

HARD PASS!

You don't operate any legit business by maxing out credit cards... also, most businesses FAIL within the first 5 years.

Aloha,

Any competent PM should be providing you with monthly financial reports showing all income and expenses, and including copies of invoices paid during the reporting month.

If they are making repairs with their own, in-house staff, I would require itemized receipts for materials and separate hourly labor charges.

Your Management Agreement should also have a per incident limit, which they cannot exceed without your approval, except to protect life or property. This limit should be at a minimum, $1000 in most markets. Owners that want to approve everything over $250 are just control freaks, and I won't work with them.

Bottom line, if you have trust issues with your PM, you probably should change PM's.

Quote from @Zachary Buschmann:

What documents do I need before or at closing to properly show transfer of lease ownership to me when buying a property with tenants in place already?

Aloha,

Ideally, the Seller/Seller's Agent would send/post a notice regarding change of management, effective on/about estimated closing date. They would provide brief introductory information...name and contact info for you/your company/your PM. This would be no more than a week or ten days in advance of closing.

Immediately after closing, you/your company/your PM would send/post a notice confirming the new management effective date, with additional contact info, such as a separate maintenance or accounting contact, and further instructions on where, how, and to whom, rent is to be paid.

Beyond that, you are limited to the existing terms of their written Rental Agreements until the stated term ends. It is best practice to send notice of termination of that agreement within the time frame required by local law. Along with the notice, you would provide an application for them to complete, and have them provide you with supporting documentation so you can screen them to your standards. IF they measure up, you would then, in writing, offer them the opportunity to remain based on your new terms, and your new Rental Agreement (provide a blank copy for review). Alternatively, they need to vacate by the end date of current agreement (or, based on local law, become a holdover Tenant subject to holdover rates).

If you have not already inspected each unit, I would also require them to promptly schedule with you a brief walk through inspection so that you can document current conditions and look for potential problems and unreported, but necessary, repairs. I also take this opportunity, after having completed my walk through, of asking them if there are maintenance items that were never completed or not reported to prior management, and confirm that everything is operating properly. Confirm ownership of major appliances (by asking, not by telling), and their rent and deposit amounts if you have not already obtained an estoppel. Verify who is paying for what utils. You also inquire if there were any other "arrangements" or side deals with the prior management.

Quote from @Anthony Freeman:

Quote from @Richard F.:

Aloha,

This is totally dependent on current age and condition of the specific property, and how accurate you want your budget to be. A newer property in very good condition will require less per month NOW, than an older property that has been milked dry by a prior owner. It will need much more in 10 or 20 years. It is important to understand that every element of the property has an "expected" life, and this varies by the type of element. Your job is to estimate how much life is left in each element, thereby predicting when it will need to be replaced or have major maintenance. Develop your budget from that information.

Of course, the easy way is to pick a % number and hope it is close to accurate; or that you have buckets of money when something "unexpected" needs immediate replacement. The fact is, 'normal" failure can be reasonably predicted. There are lots of residential construction "useful life" statistical charts found on the internet.

 Makes sense. Has budgeting kept you away from disaster or have you faced hard times due to repairs anyway?

 A budget is just a tool to help you plan for expenditures. If you take steps to create a reasonably accurate budget, based on facts, vs. guesswork, it will provide a better, more accurate plan. For those people starting out or in early phases of RE investing, this can be very important when you have limited resources for problem solving. For others that have essentially unlimited resources and decades of experience, it is much less important to be accurate, and becomes more a measure of performance.

The fact is, there are some large ticket items than can fail suddenly, others that deteriorate over longer periods due to lack of preventative maintenance. If you are not able to adequately identify those elements and prepare for them, you will often be faced with a large expenditure when you can least afford it. You just have to read these forums to see how often this happens shortly after purchasing a property. Water supply lines; waste and sewer lines (or septic systems); roofing; gutter/downspout systems; window  units; electrical system; HVAC systems; foundation; structural framing; exterior walking surfaces (frontage sidewalks and driveways); as well as more cosmetic interior items including paint, floorcovering, cabinetry, fixtures, and major appliances, all can create some level of hardship if you are not prepared for them...some much more than others, obviously.

Always remember, prevention is much less costly than remediation. Preventative maintenance is the best way to extend the life of most elements. Be pro-active, and do the right things right.

Aloha,

Did the applicant personally view the property? Regardless of age or ability, I never rent to someone that has not physically walked the property. It simply is not your responsibility to determine what is, or is not, "needed" for an applicant, in terms of their physical or other capabilities. Any modifications requested due to disability are their responsibility to pay for, AND to restore to prior condition upon vacating. They do need to request those accommodations, however.

It IS your responsibility to provide all prospective Tenants with a functional (as designed) property, that is clean and safe from physical hazards. If there are uneven floors, wrinkled carpet, loose tiles, very low beams or ceilings, poking or bumping hazards, etc. that is trouble waiting for ANY Tenant that can cost you.