All Forum Posts by: Don Young

Thanks @Matt Motil and @James Wise!

I appreciate the detailed responses.

I haven't decided whether or not the interest is worth pursuing, especially if it only applies to the second year we were there...probably not in that case. My understanding was originally that this would have applied to the full 2 years. I am more so concerned at this point that the landlord is going to give us the deposit back at all. I have not heard from him since Thursday when he said he was going to "look into it" when I let him know we were expecting $2000 back (minus any deductions).

I figured out via my old bank statements that we paid him the first month plus the deposit in cash. If he decides not to pay us, would we have a leg to stand on in court? (I realize now we should not have paid him in cash - lesson learned!) I have proof that I took the cash out of my account for the deposit and rent, but I suppose that is not proof that I handed it him. Our lease says $2000 for the deposit. If he gave us keys and let us live there for two years, is that not a legal acknowledgement that we met the terms of entering the lease (i.e. paid the deposit listed on the lease plus all rent)?

@Christian Carson, what are your thoughts on the above question?

Good point Dan, working on that now. Thanks again. Hopefully I'll see you at the next meetup!

Hello @Jay J. and @Dan L.,

Thanks for the input and advice!

My roommate and I can't actually remember if we gave the deposit in the form of a check or cash. We'll start digging into it if he takes much longer to respond or says he never got it. I also don't think we did a good job documenting the state of the house when we moved in or out. I know this is something that should definitely be done, but in the stress and commotion of moving, we must have forgotten to do so both times...the house is pretty dang old, so there would have been a lot of pictures.

If we find that we had paid in cash, are we screwed if he claims we never gave him a deposit? We still have a signed copy of the lease stating our deposit was $2000. Giving us the keys, I would think, is agreement that we met our obligations to enter the lease, including paying the security deposit stated on the lease.

Hi BP,

I am an aspiring real estate investor who currently rents. I recently moved out of a house in Cuyahoga Falls, Ohio that a friend and I rented for 2 years. 

When we moved in, we had to give a security deposit of $2000 (we were told $1500 when we viewed the house and this changed when we went to sign papers). Our rent was $1050. Our move-out date was July 3rd this year. 

I called my (former) landlord today to ask him if we needed to pick up the security deposit from him or if he would mail it. He said he needed to check his records and that he would mail it and asked me to text him my new address. When I texted him my new address, I also mentioned that we were expecting $2000 back for the security deposit and that if his records said anything different to please call me before sending the check to make sure we were on the same page. 

I was a bit concerned that his response to that text was that he thought we didn't give him a security deposit, but he was going to check his records. We have had a good relationship with the landlord despite him not having been the most responsive guy ever, but I get that, especially being a member of this community. I don't see any reason to panic unless he says that he has no record of our (big) deposit, but I did some research online to prepare for the worst. 

I found that he has 30 days to pay, so he has plenty of time. But I also found that according to Ohio Revised Code 5321.16 Procedures for Security Deposits, he actually owes us interest on a portion of the deposit that he was supposed to pay back to us yearly which amounts to almost $100 if I am understanding correctly. The code says "Any security deposit in excess of fifty dollars or one month's periodic rent, whichever is greater, shall bear interest on the excess at the rate of five per cent per annum if the tenant remains in possession of the premises for six months or more, and shall be computed and paid annually by the landlord to the tenant."

1 - Do I have this right? Does he actually owe us more than the deposit? Are there any of you BP folks who have paid this interest out before?

2 - Should we expect a landlord with 10+ houses know this law and pay out the interest with the deposit automatically?

3 - I'd feel a bit unreasonable asking him to include the interest, but more than a month is quite excessive and it would honestly make up for a couple of things we probably shouldn't have had to cover. As a landlord, would you feel any ill will toward a tenant if they asked you to pay out this interest?

4 - If we do ask him for it, I'm thinking I'd rather do so after he has assessed whether or not to deduct for anything and sends us the check. I really don't think he has any reason to deduct anything, but I am concerned he might become more critical and deduct off more than the interest for very minor things. Is there any problem with taking this approach?

Hi @Gwen Fyfe. It is a pretty casual meetup. We often stay until around 10. If you cannot show up until after 6, that is no problem.

Thanks @Will Chamberlin, I will keep that in mind.

@Will Chamberlin @Zach Zimmer @Alexander Felice

Thank you all for the input! I feel much more confident now that I can come up with the number I need.

@Ryan Arth Thanks for your input too! I had some folks here at work suggest that $3500 was a decent number to work off of as well. I'll be at the meetup tonight and would definitely appreciate the opportunity to discuss further.

I understood PMI to be a monthly insurance you pay because of the lower downpayment, up until your equity has passed a certain percentage of the value...was it something like 20%?

Is there a lump sum that has to be paid up front for PMI as well? Is there an option to pay a smaller lump sum up front as opposed to monthly?

Thanks @Alexander Felice! I appreciate your input. I assume that the lender will accept my personal emergency fund as a factor towards the 6 month mortgage cash reserve?

I'd prefer not to use my 401k, but having a credit card as a backup for emergencies seems like a reasonable path that I honestly hadn't really considered. Thanks for the tip!

I won't know expected cap ex needs until I find the property I want to buy, but I suppose I can always budget in my savings for a certain amount and only go after properties that fall within that range. Definitely a good thing to consider, thanks!

Can any Cleveland/Akron area folks comment on the closing costs they generally see?

Does anyone use a rule of thumb for savings, i.e. 5% of the purchase price set aside for emergencies?

Hi BP!

How do you all budget for a new investment property purchase?

I have been saving with the goal of purchasing a duplex within the next year or so. I'd like to house hack. I've realized I'm more likely to make this happen faster if I can figure out exactly how much money I need to have saved up to get started without spreading myself too thin. I plan to keep a personal emergency fund of 10k in the bank that I'd prefer not to touch.

Duplexes in my area run around 120k. I'm assuming I can get an FHA loan for 3.5% down...I'll verify this with lenders as I get closer to being ready. I know I need to budget for closing costs and I've read these can be between 4-6% of the purchase price. Have those of you in the Akron and Cleveland areas seen these numbers?

I'd also like to have some percentage of the property's value set aside for any big emergency repairs. How much do others budget for this kind of thing? 5%? Do you consider your personal emergency fund as money that can cover these costs, or do you stay conservative and have a separate sum set aside? Do you use the same percentage and set aside a chunk for each new property you buy, or do you maybe decrease the percentage as you get more properties and have a bigger chunk of money saved?

Thanks in advance for any input you can offer!

Edit: My previous post showed up twice...not sure how to delete this!