All Forum Posts by: Greg Weik

@Oren H. even in the Denver market I would not be able to answer this question for a client, and we manage over 600 doors.  What the market is doing, as @Drew Sygit said, is incredibly local and specific to a given property.  We are seeing some houses in the Denver area still rent very quickly, but other houses in other markets (such as certain Denver suburbs, Colorado Springs, or northern Colorado), or other types of properties have been sitting longer than I've seen in some time. 

I suspect Boise is actually fairly similar to Denver in terms of the rental market.  The past couple of years have been very good for rental rates, appreciation, and properties have been renting quickly.  All of a sudden, the brakes have been pumped.  Some of my clients, I know, are very hesitant to respond to the market (even with our guidance) with price drops and condition improvements because they are still mentally in a March/April 2022 frame of mind.  A lot has changed since then and it's important to live in the now. 

I think a better way to get the answers you seek from your PM (and you can probably find out these answers without asking them) would be to determine the following: -How does the marketing look?  Do they have good photos and/or a video tour?  -Where is your property listed?  -How responsive is your PMC to showing requests?  Do they make it easy or difficult to see your property?  Are they super-responsive, or slow to react? I would suggest either posing as a prospective tenant or having someone you know pose as a prospective tenant to see how the PM handles incoming inquiries.  I know that at my company we assume every inquiry we ever see is what we call "a mole" and it helps to keep my team on their toes.

If your PMC is handling the above well, then all you can do is lower the price and/or improve the condition of the home. Hopefully, your PMC can give you some better insight on what it will take to get your property rented, other than just blaming "the market". 

 Hey @Corey Bogaski thanks for your service! I have used my VA loan a few times to buy properties and it's a great way to go.

My advice to you is to focus first on the logistics of renting out rooms.  Make sure you have a clear process in terms of application criteria, and a solid house-hack lease with house rules.  I would strongly urge you to only allow month-to-month leases.  The m2m lease will help you hedge against anyone that made it through your screening but who is trouble and who you would like out of your house asap.  Terminating a m2m lease is far easier than trying to evict, especially on a room-for-rent situation.  If you already knew all this, you're off to a good start!

As for improvements to the home - I agree with what @William Sing said about lighting and kitchen cabinet hardware. Lighting in particular is often overlooked and it goes a long way in terms of attracting tenants or eventually selling. Other renovations will be neighborhood-specific, to a degree. It's ok to have the nicest house in the neighborhood, but at a certain level of improvements, you may not see an ROI when the time come to sell. Since you're just starting off, I think you should focus on what you suggested - paint, carpet and overall rent-ready. These things matter the most and it's important to keep up with them over time.

Facebook groups can also be a good place to find tenants.  Good luck! 

 How many landlords do you know?

 @Bruce Woodruff The answers on here are good, but society views lawyers similar to how they see landlords.  Much of society has a general sense of disdain towards both, because they see them as taking advantage of people who don't have the tools or resources to fight against them.  If we're being honest, this perception is often accurate. Most of the negativity towards landlords is based on a sense of inequity.  

I've owned a property management company for 15 years. In that time, we've had many landlords show up as clients who were the very definition of slumlords.  They hired us (or in some cases, we didn't let them hire us) thinking we would continue their abysmal operation in the same manner.  We've had clients or would-be clients bring us run-down properties inside and out.  These landlords do the bare legal minimum with their rentals just to avoid getting sued.  This type of landlord has no interest in paying a professional to fix an issue that requires a professional (such as serious electrical issues.) They're the type of landlord that "finds a guy" or "knows a guy."  

Some of those landlords have been shown the light by RES, and some have been shown the door.  The smarter landlords have seen that spending money to make money is indeed a great strategy when executed well.  We've convinced many of these types of landlords that by investing in their property, we make them a lot more money over the long term.  Better tenants, less turnover, higher rents, better move-outs, etc.  Many of those landlords, however, didn't cut it in the RES system, and they're out there in the world now, being the slumlords they always wanted to be. 

But... just like lawyers, it's not right to paint an entire industry with a broad brush.  There are always good ones, not-so-good ones, and objectively bad ones.  The overall negativity towards landlords is unfortunate, but it's not likely to change.  The best we can do in our little slice of the world is to try to move the needle in a positive direction by being ethical, and professional, and by keeping our properties in better condition than is required. 

@Linda Thomas The lease should never be a secret.  Always volunteer this - it's a contract that binds both parties and it's important to be transparent about your terms.

Pro tip from RES, this is the order of operations:

-Pre-screen before showing to confirm income, move date, pets, credit score, and virtual tour has been viewed. 

-Showing in person

-Application

-If the application is approved (credit, income, rental history, background check all pass), email them your standard lease template with an approval template explaining the next steps (they pay a holding fee).  The lease template is so they are aware of standard clauses for the property and avoids back and forth. 

-Applicant pays a holding fee equal to one month's rent to secure the property. This is the quid-pro-quo for you to take the property off the market and tell other people it's rented.  This can happen before the lease signing, provided you carefully explain your protocol in writing (best if this is in your application) with the holding fee: it's non-refundable after a certain period of time (72 hours for us, but $500 is immediately non-refundable if they change their mind in <72 hrs) if an applicant changes their mind about leasing the property.  The HF becomes a credit towards move-in (security deposit) once the lease is signed. 

-Why this process works:  even if you have a fast DocuSign process (as we do), you don't want to take the time to prepare a lease for a "merely approved" applicant who may have applied to multiple places and may have no real intention of renting your place.  Once they pay the HF, you're off and running.  The tenant has seen the lease, knows the process, and no one is wasting their time.

Our holding fee back out rate is less than .2%. 

@Jayne Florez Just because something is in a contract, doesn't mean it's enforceable.  It's not at all uncommon for contracts to contain clauses that are not enforceable. 

Ultimately, if you end up in court, a judge will decide whether a particular contract or clause in a contract is enforceable.  There's a lot to this analysis and it's been a while since I took contract law in law school.  Negligence on the part of the PMC or its agents, and subsequent damages and culpability, is something that I cannot imagine a scenario where it could be contractually pushed onto another party (you). 

That being said, yes, have an attorney review the PMC's contract.  I suspect the language is not as draconian as you may believe.

Hi @Jacob Beran, this is an all-too-common situation with roommates.  

Unless there is a legal situation afoot, such as domestic violence, or a situation such as military with PCS orders, the short answer is you're not required to change or terminate the contract.  I just want to set the table with that as a starting point. 

The entire point of a contract is that the parties agree to uphold the 4-corners of it, even if their personal circumstances change.  This is why we have contracts, so someone's personal situation is not grounds to re-visit the terms and/or alter them. 

If you choose to consider (not allow outright) a roommate change, I would suggest charging a not-insubstantial fee.  We charge $200, and require very specific documents to be completed. 

Some food for thought:  

-the new roommate is signing onto the original lease, and that means the original condition of the property.  What if the departing roommate caused or contributed to damage that is currently present in the property?  This is exactly the kind of legal "in the weeds" stuff that can come up with roommate replacements. 

-who paid the security deposit?  Is your lease clear on how security deposit disposition is handled? 

In short, to successfully change out roommates, you need the following:

-a solid release, that everyone agrees to. We call this a TVA or Tenant Vacating Agreement.  The vacating tenant releases all right to the property, any items left behind, and releases all right to the security deposit. All tenants sign.

-you need to change the locks or digital door code.  Liability. 

-you need a TAA or Tenant Addition Addendum, that the new tenant and current tenant sign.  This has to have language about what the new T is signing onto and agreeing to. 

-I suggest having the new T also sign your original lease. 

Alternatively, just say not to the T who wants to leave.  Tell them they are on the lease until it ends and you intend to hold them liable for the contract they signed. Depending on the situation, you can float lease termination to the remaining tenant and simply try again with new tenants if the remaining tenant agrees to it. 

Hope this helps.  A good PMC will have processes in place to deal with this kind of scenario. 

I can't tell if this is a "strategy" question or a "morality" question. 

As a property manager with over 15 years in the business, my clients have run the range from "Let me call my buddy to just put duct tape on it" to "Spare no expense, I want my tenants happy at any price."  The clients in the former camp would never admit they are slumlords and the clients in the latter camp would never admit they are throwing away money. 

Somewhere in the middle, is a happy medium, I think, as an investor.  Not exactly in the middle, though.  Closer to the "keep the tenants happy and keep the property excellent" camp is the best strategy and happens to check the morality box as well.  Some will disagree with me, but I probably would not manage their properties.  :) 

My personal approach:  I buy single-family homes as rentals.  Most of them are nicer than the houses my friends and family live in.  They're big, updated, and in very nice neighborhoods.  For me, this is more strategy than it is morality.  Feel free to DM me if you want to know my thoughts on this - it seems to go against the grain of a lot of what I see here on BP.  Ultimately, I'm here to make money and build wealth.  If a tenant wants to pay $3400/month in rent, I'm not going to get in their way. 

@Noah Harper Sorry you're dealing with this, what a pain.

As a licensed Real Estate Broker, I do not believe the previous sellers had a duty to disclose the fact that your neighbors are noisy. I'm not an attorney (though I do have a legal background), but this is not a material defect.  It's not listed as one of the domains of disclosure to new buyers, nor should it be.  It's not a permanent, immutable fact, and human behavior can change at any time.  

In short, I would not burden your conscience with volunteering that your neighbors can be noisy.  My neighbors routinely have late-night parties in their backyard that are loud and go on later than my wife and I would like, and that situation is indistinguishable from your neighbors having a religious ceremony.  Noise is noise. 

I applaud you for doing the right thing and speaking with your neighbors first.  Honestly, they sound like jerks.  Being "legally allowed" to do something doesn't make you a complete jerk for disregarding the quiet enjoyment of your neighbors.  Are they owners or renters?  If they are renters, I may have a proposed avenue to resolve this. 

I think your best next step is to actually consult an attorney.  The attorney will likely advise you to document each and every situation, whereby the neighbors are creating a nuisance.  Document the time, and the duration, and document your requests for them to cease the noise past a certain time of the evening.  From there, a good attorney will likely propose possible strategies to move forward.  

Tough though it may be, I would not give in and sell.  Especially now, with the market cooling as much as it has.  

@Kyle Curtin I think this analysis is good, but ultimately, as @Nathan Gesner alluded to, this determination will come down to how you value your time. 

In the beginning, money will be tight - you won't technically be "worth" as much.  Do more yourself. 

As you become more successful and objectively "worth more", your time is better spent on higher ROI endeavors or simply enjoying the free time you've earned.

I know there are people who are objectively very wealthy, and still for them penny-pinching is a way of life.  It's an ideology at that point for some people. 

I'm definitely in Nathan's camp (other than owning fewer rentals than him! :) ).  Life is short, if you've built something you can use to enjoy life, use it to enjoy life.  Delegate everything that can be delegated (which is not to say you should not hold others accountable for what they've been delegated.)  My PMC also manages my rentals, I pay them, and I get no special treatment.  I'm just another client in the system.