All Forum Posts by: Daniel K.

How do you handle a tenant not paying the last month of rent?  I am sure many tenants think nothing of this and assume the security deposit covers it despite the lease saying it is not for covering rent.  

There's no way of knowing if they intend to become squatters so due diligence requires serving a notice to quit and following up with eviction to avoid prolonged vacancy.  But is this what most of you actually do, and does it happen often?

I think I might be dealing with this now.  But going forward, to avoid this I think I will remind tenants with a canned message near the end of their term that the security deposit does not cover rent, and pay or quit notice/eviction will begin when last month's rent is overdue.

Here in Ohio, I recently closed on a rented SFH with a tenant that ended their lease 1 day after I got keys. I owned the property for 2 days under their lease. It's time to follow up with the security deposit so I need to contact the lessee to see where to send mail. However all contact info I can find on the lease leads to nothing and I have been trying to reach the tenant for a week now.

The lease provides numbers only for the County because the tenant received assistance from the County.  According to the lease, the board of mental health is to be the "primary contact" between the landlord regarding the tenancy.  All numbers listed on the lease are either disconnected or they automatically forward to the County which has led me to four different people who said they do not even know of the tenant or they leave messages for others who never follow up.  

I predict four things happening here:

1.  I suddenly get a call back from the lessee's caretaker, or at least a County employee, with an answer (seems unlikely at this point as I called multiple times and got voicemail)

2.  I send the followup via certified mail, to the County Board of Mental Health.

3.  Nothing happens.

4.  I suddenly get sued by someone for not following up on a security deposit because they were impossible to reach.

I am thinking #2 is the best option to prevent a #4.  Do any of you have better ideas or a similar experience?  

@Aaron Macken Good point about the timing.  It's true if your rehab takes too long or too much money anyway, you can end up better off with a turnkey purchase despite steeper competition.  If you figure what people are overpaying for turnkey and it's a smaller cost than your own rehabbing/vacancy you're probably better off trying to score a turnkey. 

For the second question, no, that's what private money lending is for.  Lenders for that will usually want you to have some experience unless you decide not to deal with them and just source cash from private individuals instead.  The closing cost for conventional loans are at about 3%.  The bank for the conventional mortgage would also require another appraisal after your rehab to account for the increased equity, then take 3% again if you did cash out.  You use the PML money to buy with low closing cost, then cash out equity to pay off the PML money ASAP to get a lower rate conventional mortgage for the long term.

It's a very subjective question, subject mainly to how handy and comfortable you are with doing your own rehabbing. The more of your own rehabbing you can do, the better off you will be with BRRRR than turnkey because labor is really expensive right now so your work can build a lot of equity and cashflow. In this market, at least near Cleveland for sure and probably most other places, turnkey properties are sold in bidding wars with people who don't intend/are unable to do rehabbing, and owner-occupants are usually willing to pay a lot when they want the house, so turnkeys are not usually selling at a good price for investing.

Turnkeys usually have their own problems when the deal makes sense, which is usually the property is under-rented or has a bad tenant.  Personally I'd rather rehab a house than try to fix a bad tenant issue or overpay for something that could be hiding shoddy work under it's recently-flipped veneer.

I've never inherited a tenant with a property purchase, nor have I served an eviction, but I am faced now with the prospect of buying a good property/location where the tenant has a few red flags.  They are currently leasing month-to-month.

The problems:

1.  They are unsanitary.  Open food was stored all over the floors in every room.  Mostly things like cheese puffs, chips and pop tarts.  Odor of feces throughout, but not a smell like sewage that indicates an issue with the property itself.  Roaches and rodents are likely there even though I didn't see any.

2.  It looks like they probably cannot afford the rent because they had a squatter style room setup: all mattresses were on the floor with no box spring or bed frames, lack of dressers or basic furniture in bedrooms, no place for clothes/clothes were piled on the floors, no decoration besides computer printed B&W images taped to the walls.

3.  The listing advertised that they are paying $950 rent per month for 4 years month to month, but the history on Zillow shows that 4 years ago the property was listed at $1000 per month rent.

The issue of unsanitary living is a big liability.  Since they are renting month to month, I can simply terminate the lease, or evict them, which my investor agent suggests doing.  Even during the pandemic here, he said evictions are not terribly slow, difficult or expensive.  But my main concern is that though they are unsanitary, they still look like a candidate to use the CDC's (unconstitutional) order to ban evictions under specific circumstances.  Most of you are probably aware of this order which was a big topic here, but here's a link anyway 

https://www.marketwatch.com/story/cdc-issues-nationwide-eviction-ban-through-the-end-of-the-year-in-an-effort-to-control-coronavirus-2020-09-01?mod=article_inline

I would hate to be forced to let them live in filth and catch hantavirus, so that they have a reduced risk from catching SARS-CoV-2 by living in government housing or with their family. And it is a good property.  Should the possibility of having to evict soon, under these circumstances, seriously dissuade me from buying a good property for long-term holding?

Yes definitely not to code.  Apparently it's the ceiling that's the problem, so it basically isn't fixable. Looks like a pass indeed.  Thanks for the input everyone.

I have a choice between two cape cod homes that are otherwise about the same.  One has low headroom in the stairway going upstairs to two bedrooms, with the master bedroom on the first floor.  How much of an issue is it that tenants have to duck their head down to 5 feet entering the stairway?  Is it worth buying for a price of 15000 less than a similar home without the issue?  Have any of you dealt with a property that had this issue?

There are four lenders who do conventional mortgages for investment properties in the area I am aware of.  First Federal of Lakewood, Huntington Bank, Rockway Mortgage in Parma, and Cross Country Mortgage.  I have had decent followup with all these lenders and I prefer First Federal or Huntington.

Joe Dirk and Associates / ReMax is my go to agency as of 2 years running.  

I see an opportunity in my neighborhood to buy a home before the owners put it on the market. As someone who's only purchased homes with an agent through MLS listings, and never cold-called or worked with FSBO, what should I consider before I can pitch a strong offer they would be enthusiastic about?

How do you maintain a minimum credit requirement for tenant applicants applying to the same unit (IE a SFH)? Do you require that everyone applying individually meet the requirements of the limit, or do you average the score?

I would hate to lose good tenants that meet the 650 minimum requirement, just because they are bringing an adult child with them who lacks a credit history.  Yet strictly adhering to the requirements protects you from being sued for discrimination.