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All Forum Posts by: Derreck Wells

Derreck Wells has started 12 posts and replied 530 times.

Post: What Would you Do?

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

Be aware that the lead paint laws require you to delead rental units within 90 days of closing in order to not be liabe for past tenants. If there is no lead certificate on file with the state, you WILL need to delead, so use that in your negotiations. Assume $5k per unit and count the exterior as a unit, so a 4 family would be 5 units and assume $25k expense after closing.

If you have any questions, let me know, I'd be happy to answer them for you.

Good Luck,

Derreck

Post: Tenant no responding to rental raise

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

Start the eviction process as soon as she misses a payment.

Post: Tenant adopting child

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

Hi,

Check your local lead laws. In MA you would now be required to delead the unit and the exterior of the property. As mentioned above, you cannot discriminate against the family, even if it's because you know there's lead paint (or think there might be). You MUST legally delead that apartment if there's not already lead certificate on file with the state or she can sue you, and you will lose. The EPA lead disclaimer form doesn't cover you, you MUST delead the unit.

The first step is to check the database to see if it has been inspected in the past. Second step is to hire a lead inspector to inspect it if it hasn't been. Third step is a licensed deleader will take that report and make the unit 'lead safe', we don't make them lead free in MA. The tenant will probably have to be displaced while the work is going on. If she can't stay with friends or family for a few days, you are responsible for the hotel costs (or you can put her in a comparable vacant unit. Pro tip: units are always cheaper to delead when vacant because we don't have to deal with tenants belongings.

I don't know what state you're in, but let me know if you have any questions, I'd be happy to answer them if I can.

Good Luck,

Derreck

Post: Just sold my house in MA. Should I rent, buy, or invest?

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269
Quote from @Tijana Flowers-Harris:

I am selling my house in MA. I currently rent in the RDU area (Knightdale). I am finding that it is more cost-effective (today) for me to rent my primary residence rather than to buy. I also can't afford to own in the side of town that I'd like to be in (Cary/Apex) but can afford to rent (my children were recently accepted to schools in this area). 

I'd like to invest the proceeds from the sale of my home in Massachusetts. Would it be possible to purchase a three-family home up north while renting down here? There aren't many duplexes or triplexes down here to purchase. Developers build them.


 Hi Tijana,

Be aware of the Lead Paint laws in MA, they're very strict. You need to delead any rental properties within 90 days of closing to remove the liability of past tenants... yes, you can be sued by tenants you never even met> MA attached the liability to the properties in 2017 when they changed the laws. The only way to avoid the liability completely is to delead immediately, so use that as a negotiation tactic when buying. 

You also cannot rent to a family with a child under 6 unless the unit has been deleaded, the EPA lead paint disclosure form isn't enough to allow it like some people think... the unit needs a letter of compliance to legally rent to them. There are no exceptions to this law. You also can't pass over a family applicant because you don't have a lead certificate because that violates the anti-discrimination laws. 

So ask for lead certificates when doing your due diligence. If they don't have them, assume $6k per unit to delead (count the exterior as a unit) and use that number to negotiate the purchase price. (A 3 family would be 4 units counting the exterior, so use $24,000 as a base number to negotiate with.)

There;s also a database online you can check to see if the unit has ever been inspected.

Good Luck!

Derreck

Post: Renting out primary and buying new house

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

As far as your specific question goes, I don't think the banks will count the rental income on the house in FL towards your income requirements for the new mortgage because you are still living in it, but that's a question you'll need to ask your lender to be sure on.

Post: Business structure in NH to hold a 5 unit retail building?

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

Hi All,

I'm jumping in the deep end.

My first real estate investment is in the works and it's an owner financed 5 unit fully rented retail building. Owner has no loan against the property, so this is just between me and them. They're a nice, retired couple that moved to FL. and don't want to be bothered anymore. 

My question is how to structure my end so that I protect myself from the property and the property from my other business. I own a company pulling lead paint out of houses in MA. and while I'm well insulated against lawsuit (the state inspector has to sign off on my work before issuing a Lead Certificate, transferring liability to him) you just never know what a lawyer will try. If I ever get sued, I'd like them to not even know that I own real estate. If I can keep my name off the deed and off the LLC it would be ideal. I know this can be done through a WY. LLC, but that would take a couple weeks to set up and I want this done ASAP.

Is there a way to create a Trust, open the LLC in the name of the Trust, then take deed to the property in the LLC name? Is that allowed in NH? NH also has "charging order protection" (a good thing) but not against single member LLCs, so that's something else I'm trying to figure out. If the Trust owns the LLC, that would make it a "single member" LLC, correct?

Thanks in advance for any input!

Derreck

Post: Inspection Done - Look for advices on this house

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

"I don't think I have a deal..."   Then you shouldn't buy it. Period. 

Post: Offer accepted on a great deal, but there's lead paint AND kids

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

@Matt Davis I know this deal is dead for you, but you were correct to be concerned... and most of the advice you got on this thread is terrifying. I'm really glad to see that you're aware of the laws. In MA you cannot rent to a family with kids under 6 unless you have a lead cert on file with the state. Period. That landlord is already breaking the law and I'm sure that's why he hasn't raised the rent on the tenant because she'll report him if he does. 

To Answer @Maurice D.'s question, had he bought the property, he would have 90 days to get the deleading process going in order to avoid liability (Also Maurice, you can't evict a tenant because of lead paint, MA requires you to get them a hotel and delead the unit. That applies even if you legally rent a unit that's not deleaded to a couple and they get pregnant. You have to get a lead cert.) IF you bought it and didn't have a deleading contract from a deleader in hand by 90 days after closing, you're on the hook for any and all past tenants that might have had their kids poisoned there. It's MA's way of getting the rental units deleaded. They have attached the liability to the building instead of the owner so that it passes through to the new owner. They then give the 90 day deadline to get out from under that liability so that the new owner will get it done. 

@Matthew Irish-Jones being lead certified doesn't allow you to do any lead abatement work. You might want to never put that in writing again. Every contractor in the country is supposed to be RRP certified, even electricians and plumbers. That's a federal law and different from doing lead abatement work. MA actually has 3 levels of lead abatement licenses, low risk, moderate risk, and high risk. The different levels mean you can do different abatement methods. I have a moderate risk license so I have to replace the door (or trim, or whatever component has the lead) where a person with a high risk license could scrape the paint up to the 5' level. They create dust when scraping, which is a higher risk method than just replacing the whole thing. Also, the x-ray gun the inspectors use to test show down to the wood. Just having layers of paint over it doesn't stop it from being seen. 

@John Underwood you sir, fail at Google. 

@Nathan Gesner In MA there are very strict laws about lead paint that go way beyond the lead paint disclosure form that the Feds require you to give. Laws are state specific and often even differ city by city within a state. You should know the laws for wherever you do business. Also MA is a very tenant friendly state, it can take 6 months to evict and once you do get them out, you have to pay for a storage facility for them for a year. Evicting a tenant in MA is EXTREMELY costly if they know the laws and fight you. 

@Theresa Harris Good thoughts, but no. You cannot have the tenant sign a waiver, that's illegal. MA is also a very friendly state and it's very expensive to evict someone if they know the laws, and I'm betting this tenant does and that's why she's living there and the landlord is $1000 below market on her unit. She'd sue and she'd win. I personally know a landlord that lost the building to a tenant for renting to her with kids. The tenant knew the laws, the landlord didn't, tenant sued and won, landlord didn't have the money to pay and the tenant settled for the deed to the property.

@Scott M. In MA the report from 20 years ago is not meaningless at all. In MA you cannot rent to a family with a child under 6 unless you have a lead certificate on file with the state. This property doesn't, it has a report showing there was lead and that it wasn't abated. This means that you are NOT ALLOWED to even renovate that unit without getting it deleaded first. You would be required to get it reinspected then hire a licensed deleader to fix the issues. You can't just paint over it, that's not encapsulation. Encapsulate is like a liquid rubber that licensed deleaders can use on certain surfaces (not on walls) and we need to test the surface first for adhesion, file special paperwork with the state, and keep the test results and paperwork on file for 7 years. 

@Colleen F. Most of what you said is close, but you can't renovate a unit after there has been a lead inspection or it will get flagged for unauthorized deleading (UD) and you'd get fined and the unit would never be able to get a lead certificate. You would have to have it professionally fixed sand they'd issue a "Letter of Environmental Protection" basically saying you did illegal lead remediation and got caught and had to fix it. The same would apply if you renovated a unit BEFORE lead inspection and replaced things up to the 5' mark. That's obviously UD and not renovating. Replace it all or don't touch it. 

Post: Risk vs. Reward in BRRRR opportunity

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

Learn the Federal, state, and local lead paint laws. In MA, if you just "suit up" and delead a rental property, you're looking at huge fines if it was previously inspected. Here, if there has been a lead inspection and it wasn't deleaded, you can't even do any renovations until you get a lead certificate on file with the state. If there was no inspection, then you can renovate and follow Federal RRP rules and be legal even if there is lead paint. So if you happen to "renovate" out all the old doors and windows that have lead paint because they had to be replaced, that's legal. If it was inspected though, they have to be replaced by a licensed deleader. The laws are tricky, but if you don't learn them, you can be fined into 6 figures. 

Post: Lead in property 101

Derreck Wells
Pro Member
Posted
  • Specialist
  • Pelham, NH
  • Posts 544
  • Votes 269

@Abbie Gibson the laws in MA state that you cannot rent to a family with a child under 6 without a lead cert on file. The unit MUST be deleaded, the standard disclosure isn't enough. You should really look into RI laws. The standard disclosure is Federal and applies to every state, but most (especially blue states" added tougher laws too. If your family is ignoring lead and own properties in MA, they're setting themselves up for huge fines. This is the EPA site which applies in EVERY state including RI... https://www.epa.gov/lead Check out the Lead based paint enforcement link.