All Forum Posts by: Richard F.

Aloha,

Check your HOA documents, most likely the House Rules, to see if they address AC installations specifically. Also check your Declaration/By laws to see who has right of access for emergency repairs...you or the HOA. Also, in writing, notify site management that you have damage inside your unit. Take photos of the damage, as well as exterior pic of the AC believed to be causing the issue.

It is typical for HOA's to require a drainage pan and line to direct the condensate to a safe discharge; OR to simply prohibit condensate drainage, in which case the resident above needs to have adequate catch pan to prevent it. There should never be regular drainage onto a walkway where it will create a slipping hazard.

Sadly, it is also typical for HOA's to simply tell you that YOU need to work it out directly with the other Owner unless a common element is involved.

If this is a wooden structure, you may want to submit a claim to your insurance if the damage is a long term spread of wood rot. Be sure to open the area sufficiently to inspect for all associated damage and termite infestation if it has been wet long term. If it is concrete, it will be minor scrape and paint.

Aloha,

To be sure I understand, you are buying an entire four-plex that is in an HOA, and the HOA prohibits you from selecting a Rental Manager of your choice? How many units in the HOA?

I am surprised the HOA would insist on taking responsibility for your investment property. I would also look into local law regarding "Powers and Duties of HOA Boards", to see if they actually even have the authority. Also be sure you have current, full documents such as the HOA By-Laws, Declaration, House Rules, HOA Annual budget, and Reserve Funding Plan. Personally, as a PM, I have been Managing Agent for an HOA AND, at the request of the individual unit Owner, managed their Rental unit ALSO. And, also have sold Owner units in HOA's that I also managed...at their request.

Depending on local laws concerning this situation, I would want to see serious evidence of the track record for this PM and the Rentals he handles. Financials, before/after repair pics and reports, annual inspection reports, and perhaps most importantly, typical repair costs...water heater replacement, toilet replacement, faucet replacement, yard service/snow removal costs, window/screen repairs, electrical troubleshooting calls, HVAC services, etc. If they cannot/will not produce legit, useful documentation, it would be a Hard Pass regardless of anything else.

You do need to consider the (presumed) fact that the HOA will be using licensed, insured pros, vs. your budget Handyperson or your own labor, but you need to know what those costs will potentially be.

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.

Aloha,

You do not mention anything about the quality of insulation currently in place, and options to improve it. Also, how are your windows? Separate storm windows? Well sealed? 3rd story, converted attic? Is there ANY insulation up there?

If this is a long term hold, strategize to make the right kind of repairs and improvements that will pay off long term first, figure out the money part second.

Aloha,

This is no different than if they had NOT found a potential Tenant, and it took you until late November to find someone new. Outgoing Tenant is responsible for their initial term, or until a new Tenant starts paying rent. You do have to make a "good faith" effort to re-rent. The penalty fee is probably a separate issue, but would really depend on what local law allows, and the precise wording of your Rental Agreement. It could well be, if it is poorly written, that your total penalty would be limited to the one month, regardless of how long the vacancy actually runs. Only a local Attorney can answer that on review of the document.

Quote from @Nimisha Doongarwal:

So its under HOA and used by all residents. The HOA has closed the door until it's repaired so they can't use it. What comes under legal obligation for a landlord.

Aloha,

The condo building I am in took the opposite approach. They removed the gate so all Residents, as well as total randos, can enter/exit at will for a few weeks until the new one gets shipped in. Of course, everyone is up in arms, afraid their cars will be broken into or stolen. No matter what your HOA does, they will be wrong. BUT, I agree, the Renter's insurance would be the first place to seek damages; then your HO6 policy/HOA master policy.

Aloha,

It really depends on the local market. My gut response would be to sell it, although this could create serious tax liabilities you would need to consider. Since it has not been a Rental yet, you can't 1031 out of it, although you still may be eligible to exempt a certain amount of gains. Check with your CPA for your specific circumstance.

IF, however, this is a relatively common rental property, in terms of lot size and overall quality, by all means offer it for rent, but DO disclose your average monthly costs for utils, and the AC limitation. Also be crystal clear on your requirements for lawn maintenance and irrigation, and consequences of not abiding. Perhaps one or two window AC's (if the electrical system can handle them) would be all you need to satisfy potential Tenants.

If you can land a Tenant quickly, and hold it as a rental for two years, we might see much better market conditions and you would be able to 1031 at that point, probably at a higher price. Depends on your view of the future in your market...

Aloha,

Check with the machine vendor to see if you can swap locks or coin boxes. Cameras are great though...as long as they are "evidence" quality!

Aloha,

Sorry, I think you miss the mark with regard to the "greatest concerns" of landlords. 

1) Lost rent during the period from accepting an applicant, through inspections, and actual move in. These are days of lost rent that will never be recovered, AND, they typically are for a significantly greater number of days than a typical non-subsidized Tenant for a given market and seasonal timing. AND, you wait a month or two to get the initial payments.

2) The legal costs, lost rent, and repair costs when a Tenant must be removed for failure to abide by the contract terms. These are nearly ALL additional costs that will never be recovered. This includes those occasions where the Tenant either fails to pay their portion of the rent, or violates other terms of either the HAP contract or your Rental Agreement. Of course, those costs CAN compare equally to non-subsidized Tenants that were poorly or hurriedly screened. Most importantly, once you initiate action to cure or pay, you are required to notify Section 8 and they will, more often than not, terminate the Tenant from the program, so you will no longer be receiving those "guaranteed" rent payments while you go through the eviction process.

3) Inspections alone are not really too serious of a concern to LL's that routinely provide a clean, functional, secure unit; but what does eventually sour LL's is the fact that typically they have to make repairs later, even when the Tenant caused the damage or failure. Windows, screens, cabinet doors getting pulled off, unreported leak damage, physically damaged outlets and switches, and many more common issues are routinely pushed off on the Owner to repair. The Tenants cannot afford quality repair costs any more than they can afford market rent. "Normal" wear and tear has a much higher bar for Section 8 inspectors than it does for most Judges.

4) I 100% agree there are some good, long term subsidized Tenants, but finding them with one hand tied behind your back can be nearly impossible. Taking away the choice by LL's whether or not they want to participate with the programs is forcing many to turn their profitable "investment" into a non-profit charity. Operating a charity is noble and much needed...but should be a conscious choice. Not all investors have deep pockets to handle the higher costs and turnovers. There is no question of the "need" for housing, but reality is that bad habits beget more bad habits, and a significant percentage of those in need have bad habits in all areas of their life, as do their friends and families that also spend time at your property.

Maybe if the programs would pay for a percentage of the costs referenced above, perhaps the same percentage as their original, major share of rent, that would be a big step in the right direction. It just is not sustainable for small mom and pop investors to take those big hits every year or two. They often end up in financial difficulty as result, and are forced to dispose of the property, or just perform minimal maintenance allowing the property to deteriorate until it is a neighborhood problem.

Have I tried renting to Section 8? There was a time when I was responsible for over 600 units for about a five year period in the midwest. Easily 15% of them were section 8. So yes, I am familiar. I also understand that markets vary, smaller towns and counties might see more "good" participants, while inner city areas are much more difficult. Even here in Paradise, there is a wide range of quality in subsidized Tenants, and I've had both extremes. Promises on the front end of home visits by caseworkers and close monitoring are common. 9 Months later I received a letter advising they had removed the Tenant from the program... still no guarantees.

Aloha,

Does nobody use MS Access to create a cleaner, more useful, database for your property information? You can, fairly easily, create a standalone application for "Flippers R Us" to track everything that matters to YOU. So much of the creative process is done with "wizards"; or templates that you can easily customize. You can also pull data FROM your spreadsheets to improve reporting capabilities. Obviously for a large number of properties this can get more complex, but for smaller investors, there is a lot of flexibility and easy customization, much of which will be familiar if you are already familiar with a lot of MS capabilities in Excel and Word.