All Forum Posts by: Bradley Bogdan

Also, apologies, for some reason I was reading the OP as a 5+ unit complex, not a tri-plex. PHAs don't ask for rental info about other units in properties smaller than 5 units, so you can get away with different rates for different units. 

@David Hutson is spot on as to the procedure. Assuming the PHA accepts the new rent, they will mail both you and the tenant their standard form informing you of the changes in payment amounts by each party. 

Its important to remember a few things when looking at how much the PHA will allow you to charge someone. First off, don't forget FMR is a value that's supposed to include projected utility payments for a rental in your area. If your rental doesn't include any utilities (or only some, like water and garbage), you probably won't be able to charge full FMR for a unit. Second, the higher your tenant's income, the closer to the FMR you can charge, as the PHA allows a family to contribute up to 40% of their income towards calculated rent and utilities. If you have folks with higher income for the program, in many areas this will mean they can pay full FMR plus some utilities.

Now, these are hard and fast rules for someone moving in. They only sort of apply for a rental where the rent has increased. One of two things can happen when you increase someones rent. First, the PHA can determine that the rent increase is illegal in some way shape or form. For instance, you can't charge those with a voucher a higher rate than others in your complex, you have to give the usual legal notice for your area, you can't do it mid lease unless there's provisions allowing you to do so, etc. Usually this isn't an issue if you've got some experience with PM, as it sounds like you do. Second, the PHA will process the rent increase, and if it comes to more than they would allow the family to pay at move in, they leave the family to pay the difference, thereby getting around the 40% cap. A word of caution about this though, many PHAs take a very dim view against landlords that do this on a regular basis and strive to make life difficult for them, mine included. It is also possible the PHA may encourage your renters in this over 40% category to look for rentals elsewhere, not out of any benefit to the PHA, but as a suggested strategy to lower the tenant's monthly expense. The PHA would be paying about the same either way. 

Finally, be careful with an increase that will put your renters above that FMR rate once utilities are factored in. If you have tenants with very low (under $500/mo) or no income on a voucher in your complex, this would effectively force them out, as they wouldn't have other funds to cover the additional rent above what the PHA would subsidize.

If you need help calculating what the FMR rate is for the complex with the utilities factored in, call your PHA or shoot me a PM and I can walk you through how to do it for yourself.

As for why the current owner hasn't increased rents, here are a few guesses:

- That was the max they could charge X years ago when they bought/built the place and never looked into changing it

- They have low/no income tenants and that's the max that they could charge those tenants and assumed that rate applied to all voucher holders

- They didn't think people would pay any higher than the current rate without a voucher (and remember, you can't charge someone with a voucher more than one without)

Hope this all helps!

First off, good on you for being concerned with the impression you're giving your customers. I think if you sent a $50 gift card to a restaurant or something to the folks moving in with a "thank you for your patience" type card, they'll laugh the whole thing off and probably like you even more than if everything went smoothly. Hopefully they're great tenants. 

As for the folks that just moved out, I would definitely hold the extra day rent from their deposit, along with a charge for the time you spent moving them out. Obviously, if they weren't the ones that paid the cleaning crew, don't forget to charge them for that as well. So long as you document a reasonable hourly rate and the hours you were assisting them to move out, I don't think a judge would have an issue with you withholding that amount from a deposit. What my family does, even though it costs a few bucks, is always plan for a day or two gap until the next tenant, regardless if they're ready to move in ASAP. That prevents spillover from the previous tenant to taint the experience of the new. 

Finally, this experience is going to make sure any lease I use from now on has a penalty written in for overstaying the end of lease. Thanks for the motivation!

@Henry Le I'm curious why you don't thin you'd qualify for an FHA loan. Even if you're earning a very good income, if you plan on owner occupying your first property, you're probably eligible. Even people that have "no credit" often have had some credit worthy activity in the past, such as a student loan, not having delinquent credit, etc. Just because you don't have a credit card or active loan doesn't mean you'll have an awful credit score. The other advantage to an FHA loan in this situation is that you don't need excellent credit to qualify for one, the minimum score being 500 or 540 I believe. You do need special approval once you're that low, but seeing as you have an incredibly stable position financially, it doesn't seem like a stretch that you're the kind of person they'd have trouble getting an approval for.

All this said, I would suggest getting a no annual premium credit card and putting one or two bills on autopay, that little bit of good credit activity should be a big bump to you if you truly haven't had any credit activity in the past. 

@Michele Fischer is asking all the questions that come to my mind. If she's been a good tenant (and it sounds like shes been ideal), its probably worth a few hours of playing social worker to see if you can raise rent a bit without impacting her bottom line. Its also worth seeing whether your area has a short waitlist for a Section 8 voucher for her (assuming your rents are low enough for her to use it at her current residence at the rent you'd like to charge). 

Conversely, if a vacancy costs you a months rent, that will take about a year to recoup. If you've had good luck in tenant vetting, you probably don't have much risk. Otherwise, be ready for whatever usual chance you have of nabbing a crappy tenant. 

As for the moral obligation to keep a tenant at a rate they can afford, it would weigh on me as well. If it was an acceptably small gap between what they can afford and market rate, I'd personally keep that good tenant hands down. If its large enough to make for an issue, as its apparently getting to be for you, then I would certainly help her find a new unit. Perhaps you have a more affordable one elsewhere, or I'm sure a fellow landlord in town does. Part of being a professional in any business involves being able to sleep at night. Do as much as you feel you need to do to sleep soundly. You usually can't take back moving a tenant out. 

So much good advice here. I agree with the sentiments that knowing your PHA/Section 8 program well, knowing your city well (ie the good and bad low income areas), and being ok with renting simple, durable properties instead of beautiful ones. 

The one piece I would add is make friends with local housing oriented non-profits. They'll be able to refer you potential tenants, hook those tenants up with security deposit assistance, and be able to help those tenants with arrears if they occur. 

As an advocate for folks in my housing program, I've gone to war with landlords over pet policies a couple times before (both flagrant instances of discrimination, not in the same ballpark as this) so I've read the HUD rules on this stuff more than a few times.

According to HUD, Service animals (usually dogs) and companion/therapy animals (can be just about any pet) are indistinguishable according to Fair Housing Act and the Rehabilitation Act. Training and task oriented function (the things that distinguish a Service Dog from other forms of support animals) are not necessary for the animal/tenant to be covered under these protections. The landlord can require documentation for each animal, but cannot inquire as to the disability or its severity. Basically, if they have a doctor's note stating that they require said animal due to a disability, you can't tell them no, unless:

- There is reliable objective evidence that the animal poses a direct threat to the health or safety of others that cannot be reduced or eliminated by a reasonable accommodation;

- There is reliable objective evidence that the animal would cause substantial physical damage to the property of others;

- The presence of the assistance animal would pose an undue financial and administrative burden to the provider; or

- The presence of the assistance animal would fundamentally alter the nature of the provider's services.

Unfortunately, deposits or pet surcharges are not allowed for animals covered by these laws.

Now, all this said, landlords in my area usually just deny or evict folks with doctor's noted pets anyway and I've never seen someone bring suit. Both of the landlords I worked with backed down after they sought legal advice, but that really only happened because I was involved. My clients would have either given up the animal or gone homeless if they were on their own. 

I can't find the handbook online that I used at the time, but this handbook for public housing uses the same language almost verbatim to the handbook I used, starts at page 178: http://www.hud.gov/offices/pih/programs/ph/rhiip/p...

My advice? Be firm in requiring proper documentation, but there's not much you can do after than until you can demonstrate that other tenants are negatively affected (ie allergic and having symptoms) or the animals are doing damage to the apartment. :-(

Hahahahaha, points for creativity on the fly.

Yeah, in that case, you should be able to find renters with a good history and stable income. I've never been a huge fan of credit scores just because certain life events can really harm them despite a person being otherwise a great tenant. Don't expect perfection, but don't compromise on common sense. Good luck with your rental!

@Scorpio Johnson , RUN, don't walk, away from those tenants. It always amazes me when prospective tenants (including some of my clients), think it doesn't look shady to have an awful looking application, but have a stack of cash. Unless your property is dirt cheap, we're talking about thousands of dollars of rent up front. If they usually have that much cash, why is their credit a mess? There's a million and one reasons to avoid these folks. Politely inform them their credit isn't up to par and that's why you will not rent to them. Case closed. 

Now, if you're in an area where you're going to have a lower income tenant, you can definitely find ones with stable incomes (usually fixed), a backing program (like Section 8 or HUDVASH), or a good rental history which lends confidence. Avoid evictions like the plague, don't focus too much on credit score, but more the nature of the credit (does it all stem from a divorce? a hospital bill? an extended period of drug use?) and whether they're addressing it. 

Assuming you are renting to low income folks, remember that the poor have a lot stacked against them. On paper, they're never going to look great, but if they show issues in more than one area, that should still be a huge warning sign. 

Finally, be fair and firm with tenants. Most tenants will understand rational decisions and will appreciate knowing that they can trust you to hold up your end of the relationship if they hold up theirs. A good reputation will help lower your vacancy rate. Tenants talk.