All Forum Posts by: Chris B.

I have a separate personal checking account for rentals. All rental income and expenses go through it. Expenses that are beyond current funds of this account are paid out of my personal non-rental account. I also have a separate personal credit card for rental expenses. Separate accounts and cards just make organizing things so much easier. I agree, an LLC is usually not a best fit in your scenario for many reasons beyond the STAR tax credits. As your personal wealth goes up, consider an umbrella insurance policy.

This is a great learning opportunity!  I've suffered through many similar tenants myself so I speak from 100% personal experience.  I have transformed from a weak landlord that constantly got stepped on to one that is now fair but significantly more firm.  I follow the lease and the law and expect the tenant to follow it also.  I only allow adults to sign the lease so we are all adults.  Right?  Any deviation from that agreement ultimately costs me hundreds or thousands of dollars in losses.  If I mess up, I'm financially responsible.  If the tenant messes up, I now choose to not be financially responsible for their issues.  My rental education was quite expensive so I'm hoping you can find a cheaper university for yourself.  

You need to shape up your tenant requirements and screening process.  A solid screening process will screen out 90% of the bad apples.   Here are some of my core requirements.  Verify everything the applicant provides 100%.

Require 3X rent or more in income.
Require a minimum credit score.  I use 620, but your risk appetite may vary.
Perform full background checks including payment history, civil, and legal issues.
Take a serious look at problems revealed in the background check.  If the tenant didn't tell me about them on the application, they are denied for lying. 
If they did tell me and I allowed them to move forward to the background check, I will consider infractions on a case by case basis but may still deny the applicant.  Many times issues are downplayed but actually are serious.
Don't rent to people who have been evicted.
Don't rent to people who don't have a steady job history.  
Call the landlord before the last landlord and ask about the applicant.
Collect a complete security deposit and full 1st month's rent before handing over the key.
Never sign a 2 year lease.  There is no benefit for the landlord.

The reason of non-payment really isn't something I'm interested in hearing any more and is not my problem.  I clearly explain this to every tenant at the time of lease signing now.  I tell them I'm flexible on a lot of things but I have zero flexibility for late rent, crime at the property, and negligent damage to the property.

I do tell my tenants that I will allow one late payment and only if there is a good reason AND they tell me before its due AND they have it paid in full by the 5th of the month.  Zero exceptions to this policy.  Even after this, I've had late payments, but never had a tenant reach out to me proactively before its due to let me know.

If a tenant doesn't pay rent but instead uses that money for a new toy, vacuum cleaner, car payment, vacation, food, medical needs, or otherwise, I don't care.  You can finance most of this stuff or pay for it later.  You showed me you made 3X or greater income when we signed the lease and therefore you have the money.  If you lost a job, you had better showcase your great skill that allowed you to make 3X rent and get another job quickly.  I am not your parent and I won't use my emergency fund to support you.  Where is your emergency fund?  It is important to make it more important for the tenant to pay your bill than any of their other bills.

A chargeback as you mentioned is without a doubt an automatic eviction.  Period.  It is FRAUD and illegal.  The excuse that their information got stolen and then the criminal just so happened to have the correct apartments.com login credentials and then made a payment on your behalf flies like a lead weight.  And even if this miracle happened, rent was paid.  Why would they do chargeback for a rent payment that was rightfully due?  No judge would believe that for a second and neither should you.  This tenant paid you late multiple times, discovered you do nothing, and then took it up to the next level.

Through similar experiences I now have zero tolerance.  I have no grace period.  A rent due date of the 1st and a grace period of 5 days means to the tenant that the rent is due on the 6th as that's the real date they must meet.  I now charge a daily late rent fee.  Its reasonable, but adds up over the course of a week.  On the 5th with no rent, I'm submitting a pay or quit  5 day notice.  On about the 10th day, if not paid in full, I'm engaging my attorney to deal with this.

I also use an online payment system and only accept payment in full with all fees and fines.  No partial payments for me anymore.

A tenant will either pay late fees each month, or may get themselves evicted, or more likely, they will shape up and become a great tenant.

I've looked into this and there are multiple factors.  Assuming my current understanding is correct, you have at least the following to consider:

1. The tenant and landlord work out the amount of monthly rent between themselves.

2. Renewing tenants also work out the new rent with the landlord.

3. The government comes in and determines if they feel the amount agreed upon is acceptable.  Remember the government will usually be footing 70% of this bill.

4. The government sets upper limits for each area, city, town, county, etc...  The amount the government will pay for YOUR property is usually somewhere below these limits.  They assess your property and neighborhood and pull a number out of their magic hat.  If your number is at or below this magic number, you get a gold star.  If you are above this rate, you can lower to match or move on to non Section 8 clients.  

5. The government aims to pay a rent that is at the 40th percentile of median rents.  So they aim to pay slightly less than the average rent.

All of these mixed together can result in two identical units right next to each other having slightly different rent rates especially if the landlord negotiates each lease at different times.

Every PM runs it differently.   Every signed agreement is different.   What does your contract with your PM state about notice of cost for a fix before the job or during? That is where your answer lies.  

If it was a lot of damage, that total price may be reasonable.   I agree that I'd be a bit upset getting a $2k quote and receiving a bill for $6.8k.

Just personal experience.  I have property in Tucson (SE side, nice area, Vail school district) and in the SE Valley (of Phoenix).  All of my units in the Phoenix area have significantly outperformed Tucson.  In addition the quality of tenant applicants I've had in Tucson has gone down substantially on average over the past 5 to 10 years.  The percentage of SFHs in the area of my property that have become rentals has really increased significantly too.  Maybe a correlation.  I'd love to 1031 the Tucson property and be done with it and go for something in the Phoenix area but the numbers just don't work with difference in interest rates and value differentials.

I can't speak for Huston, but take a look around Tucson on Google maps.  Drop the person pin on random streets.  While the city has revamped a few areas, a significant portion is quite depressing and forgotten and the city council isn't exactly business growth oriented.

Colleen, thanks for the input.  Yes, several good suggestions here.  I'll try to do what I can once I get the property back.  I'm thinking of focusing inside first.  Once rented, a tenant likely won't be opposed to me doing some exterior upgrades which will be there for them and future tenants. Given its the beginning of summer now, I think I'll plan to add some greenery to the yard around October along with irrigation which will give it a chance to get established.  A small patch of artificial turf is cheap and a possibility, but I've seen some bad jobs and don't want that.  A 10 X 10 of something quality may work.  I am also leaning toward arranging for a slab to be poured.  I can add a pergola after that.  So all in all, I won't have all of the suggestions in by the time its re-rented, but I can add parts over a year and see where we are with value at the lease signing next year.  I realize that tenants wear out carpet at about a 10X faster than I do and it goes with the territory.  I'll get some more vinyl quotes and make sure they do stairs (properly) prior to signing up.  I just noticed a whole slew of additional SFHs in the area get posted for rent in the last day so it may be another tough round.  Hopefully they are off the market when its my turn.  Thanks!

Julie, thanks for your comments.

Two votes now for a slab in the back yard for tenant comfort at least during the nicer months.  Regarding staging, maybe digital staging might be a good compromise given the cost of actual staging.  I'll look into both options.  The different floor is all tile.  I agree there is quite a prominent contrast.  I'm not going to change that now, but thank you for pointing it out.  Its something to consider on my part.  Regarding plants, tenants typically don't give them the attention they need in the desert, but as you mentioned, desert plants that don't require attention may improve the feel and could go along the edge of the wall.  I do allow pets and have found since I transitioned to this, it has greatly improved my applicant options.  Thanks!

Greg, thank you for the great ideas.  

I've wanted to do something to make the back yard more appealing.  A pergola and pavers are possibly within my budget.  I've had to re-roof a home with cement roof tiles, have gotten the downstairs of two properties tiled, replaced a garage door and several appliances, ah had costly HVAC repairs in the past year so the budget is tight at the moment.  I usually take it out of my reserves, but I'll look into financing it over a year this time as suggested.

I agree vinyl plank is superior to carpet.  As mentioned... the budget but financing this may make it doable now.

What approach does the BP community take toward stairs flooring?  I had actually gotten a quote from HD in the past for this property for vinyl plank flooring and they said they do not do stairs.  It seems like it would look odd if the stairs were the only part of the home with carpet.

Thank you for pointing out the black appliances.  I'll start to keep an eye out for stainless steel replacement options.  I wasn't sure how much of a turnoff they are.  Now may be the time to let them go.

Last round, I had about half a dozen view the property the first weekend and 4 had submitted applications.  No applications were great and the one I ultimately accepted still left me uncomfortable.  As a result of problems, I am not renewing the lease.  My properties in the Phoenix suburbs get great tenants right away.

I'd appreciate the BP group's feedback on what I can do to increase monthly rent value or at least increase applicant interest in this SFH LTR property. Current tenant's lease ends at the end of June and I'll need to clean this one up before ready for re-rent. It is located on the outskirts of Tucson. Rents are in the $2k range plus or minus a few hundred and there are outliers. Having looked over Zillow for a while now, trends I'm seeing in this area that a $100 or $200 increase in rent can reduce Zillow applicant "contacts" drastically. For example, similar homes listed for $2200 might have 5 contacts after 10 days while a price of $2095 might have 12 contacts and a price of $1995 might have 40 contacts in the same period. Like all of us, I'm seeking tenants who will pay on time, respect the property, and hopefully stay for a long time. Last round, I had difficulty finding quality tenants for this unit. The HOA has let us down a bit with regard to too many cars on the streets of which a few that looked abandoned. I can work with them on this issue. That's out of scope for the moment as I'm looking for things I can personally do. I'm considering offering it at under the $2k threshold to get me more applicant options but naturally want to maximize the potential. Why not ask the community here for advice? I need fresh sets of eyes on this.

Before we get going, this round I'll hire a professional photographer to help me get better pictures.  I'll also likely be replacing the carpet on the stairs and second floor because its time.  I'm going to stick with carpet for the moment due to budget buy vinyl is not out of scope in the future.  Third, the back yard is completely gravel with no patio and the back yard is West facing. (bottom right picture)  It gets HOT back there in the evenings.  I realize a patio will make the property more appealing but I don't see the cost / benefit ratio paying off in this location.  I've started to consider a cement slab and shade sails, but those get torched within a few years here.  The front yard which is east facing does have a nice area that is covered and past tenants have set up chairs to relax here.  Maybe I can change things up inside.  The kitchen is somewhat small.  I don't think I can make it larger without significant expense. There is plenty of storage throughout the home.  Any remodeling or other tips are appreciated.  I'm handy and can do many modifications myself.  Key is for any expense to cover itself through increased value/rent.  Thanks!

I could rant here about why I don't think Alameda is a desirable investment location, but lets say just about every single quality of living aspect of life is better elsewhere out of the immediate Bay Area and away from Alameda/Oakland.  I'm not saying you should move to Compton, but suburbia across America has a lot to offer for a quarter of the price and many locations are very close to big cities.  Or you can get something 4 X larger for the same price if you want to look at it that way.  California has a great track record of appreciation which is well worth considering, but I question if it will continue as strongly as it has historically.  I don't think so.  Given your your field, you are ideally positioned to work remote and can have the best of everything.  I wouldn't settle for a condo in Alameda at that price.  

I feel SFHs are generally a better investment option over condos also but with that said, many condo owners appreciate not being required to take care of the property. The HOA will do that, just not cheaply. A SFH is probably out of budget in the Bay Area, but quite affordable for you elsewhere.

I had lived in the Bay area for about 10 years and I was shocked with how many people I knew that had never ventured out of it to experience the rest of the country.  It was as if the area was a prison people refused to leave.  I encourage anyone who has grown accustomed to their community to go explore and see what's out there.  Sure, do some research first to identify interesting places, but go do that if you haven't yet.  Comparing NYC or Chicago to the Bay Area and Alameda won't do the most good.  Similar issues.  Try something near a big town, but not in it.