All Forum Posts by: John Lenhart

 Ohio is a landlord friendly state. A quad in Dayton can be a good investment depending on where it is located. The town can offer good cashflow for yield seeking investors. It does not really offer the appreciation of say Cincinnati which is essentially part of the same market or Columbus a bit to the North East. I hear a number of Cincinnati investors diversify in Dayton because they can chase yield there while staying pretty much in the same market. 

 I forget exactly, I believe it is like $75 per dog to do the initial DNA swab and registry and send it to the lab. Then each time you have a sample and run it, it costs another $75 or $100. We have not had to do this yet. We make the tenants sign an addendum and let them know that the fine for not picking up after their dogs is $400 per occurrence. So far no one has tried to test us on this yet. In the past, they all claimed plausible deniability when confronted. They cant do that anymore. 

On the liability side, many states have their own requirements and you can’t necessarily contract out of those. Check your state laws on that issue. Otherwise, make your pet people carry insurance and have them sign a liability language (although the insurance policy is what matters because their agreeing to be liable often means little)

As for breed restrictions, we use the exclusions that our insurance company requires. When pressed on breed restrictions for service animals, we rely on the fact that is would not be a reasonable accommodation to pay thousands of dollars extra per year or shop for a new insurance policy because a tenant wants to keep their emotional support Rottweiler. 

One other thing to be concerned with is clean up of pet waste. Unless you are there to monitor your tenants will be lazy and not clean up. We just rolled out Poo Prints at one of our properties recently which DNA tests dogs so hopefully it helps. We will know more when Spring comes on that

I would first recommend consulting an Ohio based attorney (not just Ohio licensed). I would recommend Steve Robison. He is a 1031 agent and attorney who specializes in real estate and taxation law. He assisted us on a rather complicated 1031 lately that set up similar to your scenario.

Secondly, if you are buying in Columbus, I would move carefully on the drop down LLC. See the case citation I attached below. The school district in Columbus is on the prowl for these types of transactions and are aggressively going after people for these transactions. Columbus and Cleveland are getting tough to do the drop down entity transaction. It is not as bad in Cincinnati still, but that could be changing soon.

Read the case. I almost would recommend that the safer way to go, especially in Columbus, is to do a personal property carve out

Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2020-

Ohio-353.]

Stay away from Seattle. Otherwise I can’t help you much

 To answer your question, the law will take affect 90 days after passage, so that means sometime in April. If you are an existing tenant on an existing lease who has a security deposit then the law does not affect you. It essentially only applies to new tenants who are seeking apartments.

In regards to verifying tenants assets, there’s nothing in this Law that Prohibit people from asking for pay stubs, W-2s, credit history, etc. if you screen your tenants with that information already, you can keep doing that.

As an aside, it may be important to note, that currently, HUD Is considering a reform that would outlaw source of funds when screening tenants, which essentially would require everyone to accept Section 8. That is a different topic for a different day, but something people should be aware is on the horizon in DC.

Ultimately,  It depends on what company you choose. With Rhino for example, you the landlord will still be covered, even if the tenant quits paying, up to the amount of the policy. So from that perspective it is good for the landlord. 

However, it creates issues as to lease renewals, the tenant has a very difficult time of opting out of the coverage (because it must be renewed on an annual basis. In addition, the same issues as to why they went with the insurance option in the first place will still exist a year or two down the line)..

The company will work to enforce any collection matters against the tenant and send all the enforcement efforts on the tenant. 

 Robert - Just wanted to correct you, there was no law passed in October 2019 that requires a landlord to accept past due rent in Cincinnati if the tenant comes up with the full amount by the time of eviction (Pay to Stay Legislation). Some of the homeless advocates have proposed this, but to date it has not passed and really not up for consideration.  The only things that have passed to date are 

1) Registration and inspection for nuisance properties
2) Creation of a landlord database (how to do so is still TBD)
3) Landlord contact info on file 
4) Cap on Late Fees charged (pretty innocuous because the courts pretty much mandate this already)
5) Requirement to offer security deposit alternative for qualifying properties (Also pretty worthless as discussed above in more detail)

This law is really nothing to be scared about. 1) it only applies to properties in the city limits (that is only about 1/3 of the county and about 15% of the entire regions population. The vast majority of apartments in the region do not fall under this.

2) Does not apply to Section 8 units (HUD policies trump anything city hall does)

3) Does not apply to owners with less than 25 units in the city (small landlords do not need to worry about this) 

So if you are one of the small number of owners to whom this law does apply (like myself), as a landlord, if you accept only 1/2 month of rent for the security deposit, you do not have to offer an option for renters insurance. This means you can take 1/2 month security deposit and then require first and last month rent upon move in and still not have to offer the insurance alternative.

OR 

If you still choose to require a full month rent for a security deposit, then the law only requires that you "OFFER" to take deposit insurance as an alternative to a full upfront 1 month security deposit (Or offer installments). OFFER means just that. It means that as a landlord, you can comply with the law by offering to take it (and still charge a $500 admin fee or some other sort of fee for the privilege of selecting the insurance alternative as an option. In other words, you as the landlord can put your thumb on the scale to get the tenant to pick the option you desire the most. If you prefer they pick Tenant Insurance, certainly incentivize  them to do so. If you prefer they pick your traditional security deposit model, incentivize them to go that direction. Remember, even with the law, the landlords have the power to influence the tenant's decision. 

Also, another thing to keep in mind, with some of the insurance products out there like Rhino, the landlord will no longer be able to offer a month to month alternative for the tenant and all leases will be required to be renewed annually (from a practical standpoint). This is not something tenants will want, and another reason to discourage them from this type of product. 

Ultimately, this law is nothing to fear for landlords. It is a giant nothing. However, if I were a working class tenant, it is concerning. Some of the products available (Namely the Rhino product) create what amounts to a predatory loan  type product for a tenant whereby they get stuck in a monthly cycle of making continuous payments even after they may have paid a full month of security deposit and would receive no further benefit. THere are a lot of other issues that can arise from this product that make it like the payday loan industry. It is designed to work best for Class A type product but when applied to working class properties, it can be troublesome (to the poor, not necessarily landlords).