All Forum Posts by: Fred Heller

If someone backed into the door that is damage, not wear and tear. Depending on the terms of your lease, you should be able to bill the tenant.

By the way, this is why I've started requiring renters insurance with the landlord listed as additional insured for liability. If the tenant inadvertently damages the property, their insurance will take care of it and you won't have to worry about.

If you're a cash buyer, then a condo could be a good option. If you're financing, then the COA fee and the mortgage will wipe out a lot of your cash flow.

The upside is that the association is responsible for the exterior of the building. A good association will plan for necessary maintenance and repairs and try to keep any additional assessments to a reasonable level. Your insurance will also be a lot lower because you're only insuring the space between the walls.

The downside is that if the association is bad, then the building could be left to fall apart, and then you'll have a huge assessment for major repairs when they can no longer be ignored. 

I don't charge a fee for a lease extension. There is some work involved, like running comps and negotiating with the tenant. But it's pretty insignificant. And our TAR lease has a one-page lease extension so I don't have to redo an entire lease.

I suppose I could justify charging some fee as most other companies do it. I just consider it part of the service.

Whenever you see a house occupied with a tenant on an MTM, chances are they've been there for years and the landlord is just kind of lazy (or in a comfort zone) and doesn't want to deal with it and is happy to just let things roll along. Most likely he hasn't done any improvements and deals with maintenance on a must do basis. The tenant is also paying well below market rent because the landlord has never raised the rent. That's my experience.

I always encourage buying a duplex to fourplex and then living in one unit. You can do that with an FHA loan as long as you live in one unit.

The beauty is that your tenants are paying most to all of your mortgage and other expenses. It's like living close to free.

If I had it to do all over again I would do the LLC. I received some bad advice and went with an S-corp structure.

Not giving financial advice but I was informed that the LLC doesn't have any real tax advantages because all the income passes through to the owner(s). With the S-corp you pay yourself a salary of $X a year, and the rest stays with the S-corp.

The problem with the S-corp is it is very burdensome with regard to reporting and other regulations. And honestly, I'm not making enough money to justify the hassle of dealing with the S-Corp. I've actually been thinking of converting to an LLC.

So my two cents, and that's all it's worth, is that if you're not making a ton of money, start out with an LLC. You can always convert to an S-Corp down the road.

Setting all your pros and cons aside, to my mind there is only one pro and one con. Is it required or not?

Permitting is generally a city/county thing so it depends on the on your local jurisdiction.  The general rule of thumb here in Houston is that permits aren't required if you're not making any structural changes to the house.  And that means no walls are being removed or moved. Nothing is being added, etc. As long as the layout will remain exactly the same, you shouldn't require a permit for remodeling.

Now, Boulder, being Boulder, may require a permit for something like painting the house.

If a permit is required and you don't get one, it can cause lots of problems down the road when you try to sell. We've been trying to close on an empty lot since January and it has been a nightmare. The latest, and supposedly last, hoop we have to jump through involves a permitting issue. Apparently years ago there was a house on the lot that was condemned as a dangerous house. Some previous owner had the house torn down, but never got a permit. So now the seller has to apply for a permit to tear down a house that doesn't exist before we can close.

Not giving legal advice, but you might want to look up the HUD disparate impact ruling from a couple of years ago. Basically, it says that blanket denials because of certain convictions could be a fair housing violation because some offenses have a disparate impact on minority communities.

If the property is already qualified for Sec 8 then it should just be a  matter of changing the owner of record with the local housing authority.  One thing to watch out for is the delay that always seems to be a problem when dealing with them. They could send the rent check to the previous landlord or property manager if the paperwork isn't processed quickly. Then you'll have to chase it down from them. And that can be fun.

Well if your management fee is a percentage of the rent, then obviously as the rent increases, so does the PMs income. But honestly, we're talking $5 to $10 a month, which is enough to buy lunch at McDonald's once a month.

There is a fine line between keeping the rents at market rates and potentially losing a tenant. I find it usually becomes a problem when the rents haven't been raised in a  long time. I keep track of the rents in the neighborhood and when I see them starting to increase, I will look at raising the rent when the lease is up. The goal is to keep the rent in line with market rates without having a huge sticker shock to the tenant.

I have to take exception with the previous comment that it's in the PMs interest to have lots of vacancies, so our interests are not in line with the landlord. First of all, if I were ever in a position where my interests were in conflict with the landlord, I would resign the contract.

Secondly, I HATE VACANCIES. Not only are they expensive for my client, they're also a huge pain in the rear and they consume a lot of my time. Anyone who thinks PMs love vacancies has never been a PM. I have to deal with flaky potential renters. I have to coordinate any make-ready repairs. And I have to make a lot of trips to the property to show it to the same flaky renters. Yes, I do collect the first month's rent as commission when I lease to a new tenant. But with all the headaches and time involved, it's really not worth my time. And if another broker brings the tenant, I have to split the commission with them.