All Forum Posts by: Carleen L.

I recently raised the rent by $200 on my long term tenant after 11 years of no rent increases. I gave her six months notice of the increase, so she had time to work on her budget or decide to move if that was her decision. My property is still underpriced, but not as significantly. She chose to stay. 

If the tenant pays on time and keeps the property in good shape, keep the rent a little below market to keep it attractive to this tenant.  I’d go ahead and tell them that rent goes up $10-25 every year. Everyone is right that vacancy is expensive, and you don’t want to have to foot that bill. 

Make sure your locality will allow it, and put a time limit on the visit. Specify where it can be parked, and that they cannot dump their sewage on your property.  Charge them a fee for using water or electricity IF you pay for either.  Lastly, have them sign a mini-lease with these details. 

My bigger concern is that the tenant has a regular guest who isn’t on the lease. Do you have anything on your lease about overnight guests?  It sounds like she should be listed on the lease. I think I would put her name on your primary lease. 

If you have such a good relationship with a contractor you trust, what function does the property manager serve?  You can hire a leasing agent when you have a vacancy if you don’t feel up to the task, and a bookkeeper to do any work you don’t feel like doing. Sounds like you are ready to self-manage!  

I think in some states you are required to provide appropriate accommodation if the apartment is unlivable, but unless she was in a Class A apartment, Marriott seems like a luxury. What was the temperature that day?  And it can be argued that she waited 2 days to report the issue. I would research your state laws before discussing with her further. And if you don’t find the info quickly, call a real estate attorney and get informed. It will be worth the $200-300 lesson to be better prepared for the next time. 

Income incurs taxes. Not reporting income is fraud. No one enjoys paying taxes, but I would imagine having a felony charge would be worse.

He still needs a CPA, not just advice from a forum. From the wording of the OP, it sounds like he needs to shop around for a new CPA. 

The IRS will not take kindly to you not declaring income.  Money you are paid by someone in exchange for shelter is income and is declared on the Schedule E of your tax return.  I'm guessing you aren't talking to a real CPA but rather one of the retail tax preparation companies who do not have enough training to truly help you with any semi complicated return.  You need a real CPA, not a store-front, seasonal tax office.

There are ways around having turned this into rental property.  First of all, you only have to live in it for two of the past 5 years to be able to qualify for the 250k exclusion.  And if you are married, it's double ($500k exclusion).  If you rent it out for more than 3 years, you can do what is called a 1031 exchange (google this for more info) that essentially says if you sell the property, you have a short window of time where you can invest that money into a new rental and not pay taxes on the gain.  Or, you can simply hold onto it for the rest of your life.  

BTW, if your AGI is below about $37k if you are single or about $75k if you are married, you won't owe capital gains.  Keep in mind though, that if you sell the property for a profit, that amount will count towards your AGI.

If my post and the posts above don't make sense to you, please call a CPA.  If that one doesn't make sense, talk to another one.  Keep interviewing until you find one that can explain it to you.  These are beginner level tax issues for investors, and if you want to be a real estate investor, you need to understand them.  

I think it’s time to get rid of this tenant. Is she on a month to month?  Give her 30 days notice. Does she have a valid lease?  Read it and find out when to give her notice.  It has nothing to do with the name calling and everything to do with the consistently late payments. Long term tenants are only good if they take care of the property, follow their lease and pay on time.  I’m guessing you haven’t increased her rent each year either. Time to move her out, adjust the amount you are charging rent and find a new tenant. You’ll be happier in the long run. 

I think at this point, you need to take the property off the rental market for at least 30 days.  With your insurance threatening to drop your policy, you can no longer afford to rent to anyone.  Hire a good real estate attorney who has experience with litigious tenants.  Ask him or her how to handle this issue and how to fire the Property Manager.  The PM's first responsibility is to you and he isn't fulfilling his responsibility.  I agree with the others--there is something wrong with this scenario, but the important thing is to protect yourself and your property.  Good luck, and let us know how it turns out!