All Forum Posts by: Joel Fine

I agree with you @Michael Noto!  I can't figure out why the PM is refusing to consider a month-to-month lease. Besides the advantage of a trial period, I'd rather have my long-term leases expire in the spring than next December. But they are adamant.

@Bjorn Ahlblad, you may be right.

I hear you, @Mary M. and @Jill F. You make some good points about the PM.

The PM is flat refusing to do a month to month lease, despite my request to do so. They are insisting that we use their 12 month lease form. So I guess my options are to accept this, or find another PM.

Thanks @Laura Kayes and @Dennis M. for the replies.

One thing I'm uneasy about. My Property Manager is telling me that for the tenants I've inherited on month-to-month leases, it's urgent that I move them into 12-month leases immediately. I'd like to leave them at month-to-month for now until I figure out how quickly I want to increase rents and/or rehab the units. But here is what the PM said to me:

I feel like this is unnecessary but the PM is insistent. Would love to get your feedback.

Hi,

I have a question about the logistics of inheriting tenants in properties I'm buying. Specifically about how the leases get transferred to me as the new owner.

Suppose I have a tenant who is on a long term lease that has several months to go. My understanding is that I'm obligated to honor the terms of the lease he signed with the seller, even though I never signed that lease. For instance, as long as they pay their rent, I can't kick them out before the lease expires. (Not that I want to, just laying out the facts). 

The leases they signed commit them to pay the seller of the property. The seller's name, not mine, is on the lease. What is it that legally binds them to stop paying him and now pay me as the new landlord? Do I have to ask them to sign a new lease, with me as the landlord? Or does the old lease bind them to pay me now that I'm the property owner? Is there an official notification that I can give the tenant that obligates them to pay me?

I'm thinking of something along the lines of a mortgage transfer - i.e., when my lender sells my mortgage, they notify me that I have to send my payments to someone else, even though I never signed a mortgage with the new note holder. Is there some similar process for leases?

Thanks in advance for any insight you can offer.

Joel

Pointing out uncomfortable facts makes some people scream "racist." I hope you do defend yourself from this BS, @James Wise. Your "Ultimate Guide to Grading Cleveland Neighborhoods" is, hands down, the most useful web page I have ever run across. If web pages could be worn out from overuse, yours would be in need of serious rehab by now ;)

Investment Info:

Single-family residence buy & hold investment in Austin.

Purchase price: $267,500
Cash invested: $60,000

3329 Pioneer Crossing Drive, Round Rock, Texas
Deal closed 6/28/18
Cosmetic rehab completed 7/31/18
Rented out 10/5/18 (Property manager was WAY too optimistic about rent, had to drop price several times)
Cash out refi 10/15/18 - got all but $60k back out

What made you interested in investing in this type of deal?

Wanted a foothold in the Austin market.

How did you find this deal and how did you negotiate it?

MLS. House had been on the market 60 days, so got it slightly under asking price.

How did you finance this deal?

Cash followed by cash-out refi

What was the outcome?

Now rented. Took a couple of months to rent - initial asking price was (in hindsight) much too high, had to drop rental price several times to get it rented.

I'm wondering whether buyer-paid brokerage fees are common in residential investment real estate.

I've now purchased three investment properties with three different brokerages. All three are residential (4 or fewer units). In two of the deals, my broker added a buyer-paid brokerage fee of several hundred dollars. I'm assuming my broker received his 3% from the seller as well.

As it happens, the two purchases that did include a buyer-paid brokerage fee were in one state, and the one that did not was in a different state.

So, I'm wondering: Is this a common practice? Does it depend on what part of the country you are in? Is it something I should have negotiated out of the deal - i.e., was I just naive in not asking my agent to remove this charge?

Thanks BP friends for any insight you can share.

I have a property in Round Rock, Texas, just outside of Austin. Applicant had 3 big dogs, all 3 aggressive breeds, one of them a pit bull. He submitted a letter from a psychologist "recommending" the dogs for his therapy. Not a prescription, just "recommended."

My Property Manager insisted on a prescription. The applicant went nuclear. Persuaded the local HUD office to threaten to sue. Posted nasty reviews all over social media. No way can I fight that. He's in the house now, and I'm crossing my fingers hoping he doesn't do any damage.

Is it a scam? I don't know. But it sure feels like a minefield, not knowing exactly what documentation is required, and not being allowed to protect myself against pet damage.

Brainstorming here, what if you get some other concession from them in exchange for lower rent? For instance, maybe they deal with any repair under $300, even if it normally would be the landlord responsibility, in exchange for below market rent. If they are taking good care of the property, that shouldn't be much of a risk to them, but it might relieve you of some headaches, or at least one source of worry. 

For now I'm buying small multi-family, but I have been thinking about moving up to apartment buildings. I alternate between "I should start small, and besides I need to use my 10 residential loans" and "go big! apartments have better return anyway!" I'm really torn.