All Forum Posts by: Dana Dunford

@Stanci March - You are correct that they can only get by with it one time, and typically it happens on the last month's rent.

@Stanci March - Congrats on your first 8-unit. A couple of comments:

1. PayPal -- I don't recommend PayPal for 2 reasons. The first is that rent is considered part of the "services" in the Terms & Conditions. If a renter calls and complains that they want the money back, eBay has a money back guaranteed and can claw back the funds. The second is that PayPal allows tenants to pay partial. In many states, accepting partial rent means that the tenant cannot be evicted. I literally just had a landlord complain to me about this the other day -- the day before the court date, the tenant paid $10 in her PayPal account. By accepting that money, the eviction case was thrown out and now she has a non-paying tenant.
2. Personal vs. Business -- You will want to separate these expenses as quickly as possible.
3. Calling each tenant to introduce yourself -- Great idea and good communication is a key in property management

@Niyi Adewole - You are asking the right questions and congrats on your first househack. 

Do not accept the partial payment and let the tenant know that the amount is due in full (he can borrow the additional $175 from a friend or family). The precedent needs to be set that rent is the top priority. Serve the eviction notice to pay rent or quit. If the tenant has still not paid in full by the time the notice expires, then you can start the eviction process. 

You want to set the precedent immediately that rent must always be paid on time. I hope that helps.

I did a bit of research on home warranty, and here is what I found:

(1) Cost: If you look at the monthly price vs. the value you get, you (most likely) end up losing money in the long haul.

(2) New purchase: Interestingly enough, when a "for sale property"offers 1st year of home warranty for free, it gets a higher price (more than the cost of the home warranty). Buyers like the "comfort" that if something goes wrong with this large purchase ... they have insurance to help cover the cost of what needs to be repaired.

(3) Convenience: There is something to say about just calling one number and having them deal with the vendors to get the issue fixed. However, you may not be dealing with the top vendors, since home warranty companies undercut the vendor.

(4) When do people become unsatisfied: When they don't read the terms and then realize (after the fact) that there are a lot of things that aren't covered by their home warranty plan -- and now they are getting hit with a large bill.

@Brandon Benifield - There are pros and cons to both decisions, and it depends on how you value your time and money. Property managers can take up to 50% of your profits (10% of monthly rent can do that to you), but self management can also cost you (vacancy and tenants taking advantage of you). Property managers may not spend a lot of time with you (you are only one of their many clients), but self management can also require you to spend a lot of time learning the industry and operations. The decision will be personal, but do your research and hopefully you find something that fits your needs.

@Jeff B. - Thanks Jeff. Glad you got somewhat the same answers, albeit vague with some scenarios (and geez -- the BRE has you wait forever on the phone so if anyone knows a direct line then I'd love that number :)).

@Owen Dashner - When I was looking at management, I asked the BRE (Bureau of Real Estate) this exact question. Here is what I found out for our LLCs -- I can hire an administrative person to become an employee of my LLC. They can help with the day-to-day tasks as long as:

1. They are not holding my rent collection (that goes directly to our bank account).
2. They are not the decision maker. I am the one signing the leases and renewals.

I'm not a lawyer and would love to see a website that clearly outlines this for all 50 States. 

Even the BRE mentioned some "grey" areas and could not give me 100% answers to my questions. For example, I asked if someone who is unlicensed could show my property. They said "as long as that person is just opening a door" but that doesn't help me know whether this person can answer the question of "how many bedrooms are there?"

I would even recommend that you get (in writing) something from your State's department to confirm that you are conforming to regulations. I was able to get that from the States where we operate.

Final point, if you have an admin come in to help with your LLCs, then I recommend he/she takes a class in Fair Housing. It is very important (even if he/she is just picking up phone calls to schedule a showing) for that person to understand fair housing laws.

I hope that helps somewhat.

Dana

@Ralph R. - Yes, I would hope they wouldn't take 50% of the rent. However, they can take quite a significant portion of your profits (bottom line, not top), and like you said -- it can be worth it to invest in some sort of management as your time is better spent on the investment side!

@Tahj G. -- when you are determining whether or not a property will cash flow, you will want to make sure a line item for management is included in your numbers.

@Lauren Daly -- You should use the standard language from the lease. You should also have an automatic late fee in place (that goes out, per the lease agreement). Here is my recommendation for next steps:

1. Confirm with tenant why they are late
2. Remind them about late fees + eviction notice
3. Make the decision about whether you want to move forward with serving the notice to "Pay Rent or Quit" per your State's eviction process. 

Let me know if you have any other questions. I hope that helps.