All Forum Posts by: Joshua Morgan

Hi Everyone,

I'm in Warren Co., OH. We have a long-term tenant who has recently started having a guest live with them. Our lease prohibits overnight guests [7+ consecutive days] and [more than 30 days within a 90 day period]. Our lease also prohibits smoking anywhere on the premises. 

Smoking

The guest smokes. I am confident they are smoking in the apartment unit (quadplex), but do not have "evidence" of this. The guest typically goes to the curb ("public area") during the day to smoke, but I do now have photos/videos of them smoking definitively on the property (on the premises near the front door - not the "public" area near the street). 

Overnight Guest

I am keeping a log of which days the guest stays over. Due to my own travels, I have not achieved a written log of 7+ consecutive days, but am getting close to documenting 30 days within 90 day period. 

Lease Term

The tenant's lease term ends July 31 (end of next month). So, at the latest, I can have them out at the end of July. However, the smell of smoke is starting to disturb my other great tenants, so I would like to accelerate their leaving as much as possible. That being said, I'd rather delay for a "sure-fire" method (lease non-renewal), rather than do something reckless in a way they could defeat or push back in court, if it came to that. 

How to Proceed

1) Can I go straight to a 3 day notice to quit based on documented smoking violation alone? Do I have to give a chance to cure/remedy the situation?

2) Can I go straight to a 3 day notice to quit based on documented smoking violation along with documented overnight guest violation? Do I have to give a chance to cure/remedy the situation? 

If not, what should I do now to justify a 3 day notice if they continue to violate? I'm thinking I should send a written warning of the smoking and guest violation and, if they continue to violate, I can send another warning or move straight to 3 day notice at that point. In Ohio, how many warnings should I issue before a 3 day notice will be successful? (These nuances don't seem to be clear based on the Ohio landlord-tenant laws, hoping to hear from some experienced landlords in Ohio on this based on what's typically successful). 

Thanks!

Joshua

Not an attorney, but the Ohio law only says that the penalty for not listing full contact info on the lease is that the landlord is not entitled to certain notices in situations related to 1) witholding rent due to unaddressed repairs and 2) rent being deposited with the clerk or courts rather than paid to landlord.

See section (C) on this page:

https://codes.ohio.gov/ohio-revised-code/section-5321.18

Unless those situations apply in your case, I don't think the lack of contact info on your lease agreement provides you any leverage or ability to waive the contract.

I have a similar situation. You should talk to your own attorney, but my attorney told me this:

1) Although the property is owned in my personal name, I can still conduct business (lease agreements, etc) in the name of my LLC. Such formalities as a lease agreement between myself personally and my LLC are not needed. If youve already made lease agreements in LLC name, doesn't sound like you need to do anything additional.

2) Conducting lease agreements in the name of my LLC while owning the building personally still exposes me personally to potential liability. In my case, I don't have significant personal assets and have a strong insurance policy so this is not of major concern. To reduce/eliminate exposure of my personal assets, I would need to own the property in the LLC and conduct all business through the same. If you have the ability to move property into LLC, seems like that would be beneficial.

If you used something like Fannie Mae financing to purchase, however, and are going to transfer to LLC, keep in mind that to refinance using similar agency financing in a couple years, you might have to transfer *back* to your personal name. May not be worth the effort.

3) If your LLC is setup to be taxed as a disregarded entity, then there shouldn't be any concerns receiving rental income in either name - it should all flow through to your personal return either way.

In our county, the tenant is not allowed to make up the difference in rent, and not allowed to have any rent payments "off the books" (meaning you're not allowed to have any side agreements for additional rent). HOWEVER, pet fees, parking fees, laundry rental fees, etc are all allowed and are between the tenant and the owner. If allowed in your market, such fees could potentially be used to help make up for the defecit. Maybe you can restructure your rental to charge for amenities that were previously included free of charge. ;)

My opinion is, based on your question, you don't need an LLC right now and it may actually cause you difficulty.

(I am not an attorney, talk to your own attorney, etc)

Financing inside of a new LLC is going to be much harder than getting a loan in your personal name. You're almost certainly going to finance your first couple of properties in your personal name. Even if you can transfer it into the LLC right after closing, you're likely going to want to refinance in a year or two, and might have to move it *back* into your name from the LLC to do the refinance.

Unless you have a significant amount of personal assets, remember that the debt in your property is an element of your asset protection. A lawyer likely isn't going to recommend pursuing a large lawsuit if you only have 25k in equity and 10k in the bank. The fact that your property is likely significantly leveraged means there's less incentive for someone to pursue your assets.

Focus on finding and purchasing a couple of deals for now. Set up the LLC when it makes sense. I would say it makes sense when it's just as easy (or only slightly harder) to purchase inside the LLC as it is personally. If you're doing a deal with only seller financing, might as well put into an LLC. Getting a commercial loan? Use an LLC. Until that time, just hold off and focus on closing deals instead.

The only other aspect to consider is if it makes sense to set up an LLC to run your property management functions out of. You don't really get any asset protection or liability reduction benefits, but having a proper business entity that you can get business checking accounts with, etc can help out on some aspects. It can help you seem more credible to suppliers and vendors, and it kind of enforces some rigor in your finances. It's really easy to conflate your personal and business expenses when all out of the same checking account. Forcing yourself to have clean books is good. These can be good reasons to set up an LLC and get the ball rolling toward your long term systems. But, wait until you have your first property purchased, otherwise you'll be tempted to spend time & money on business cards and branded ink pens instead of taking down deals.

TechneTitle in Milford is excellent 

We are all about trying to automate, systematize, go-paperless, as much as possible. How do you accept written communications from your tenants? 

For example, when requiring a written Intent to Vacate notice form, do you: 
1) require they snail mail it to your management address?
2) use docusign or similar to handle electronically?
3) Use a service like Jotform to send out a signable form?

While we're currently house-hacking, it seems silly to have them snail-mail such documents. However, we don't want to start a precedent of receiving physical copies in a drop box. What have you found works well for receiving written notifications, signed acknowledgements, etc from tenants?

I recommend a hybrid approach here. Taken in part from Mike Butler's Landlrding on Autopilot book.

1st, only consider any part of this if she's a stellar tenant and one you want in your property for a long time. If not, only consider painting, nothing else.

Explain to her that certain requests are not feasible (moving toilet), but that you would like to work with her to freshen up the bathroom in "her home". Have her pick out a paint color from your paint supplier and some LVP from your flooring supplier. This will be a good project for her and she will feel ownership in the final result (meaning she will like it more because she got to pick the colors and such). Give her some restrictions (certain product line, nothing too bold, and that you can veto her selection if needed). It doesn't cost much to replace a pedestal with a vanity at the end of her tenancy if needed, so indulge her on that.

Now, explain that $1000 toward the project is a good portion, but not all of it. And to protect both of you on this, you'll require a 2 yr or 3 yr lease contract. Tell her this means you can't kick her out "just because" for 3 years and protects her if you were to sell the property from the next owner.

Finally, consider, instead of her paying $1000 extra, increase her rent by $80/mo with an automatic 3%raise every year in your new 3 year lease. I think this plays out better financially for you.

I dont agree with the others that you don't want her feeling ownership in your property. Of course you do...of she feels ownership she will care for it and treat it like it's her own. Get her to stay 3 years and you've just avoided turnover costs for 3 years.

Oh, I wouldn't do this in a multifamily as word will get around and you don't want that.

@Anthony Dooley

That's what I had decided on, but then got to thinking about the 3/4" - 1" gap at the bottom. Do you put weatherstripping or anything on the bottom? Or is the gap generally a non-issue?

What are your recommendations for replacing the entry door to an apartment unit within a small multifamily, such as a typical 4-plex? The entry door to the unit is off an interior hallway, not the outside.

Seems like a steel exterior door with threshold is overkill, while an interior solid-core door has a reasonably large gap at the bottom?

What do you replace your interior apartment entry doors with?