All Forum Posts by: Justin K.

Oh for sure!  I always photograph any posting with my phone which actually time stamps it based off of the cell tower.  I like your idea of the posting stating that the 5 days for abandonment has started.  I never thought not explicitly saying that would be an issue.  I will add that to my late rent notice that I post typically that starts the 8 days for tenants that haven't abandoned.  

You are a wealth of knowledge @Steve Babiak.  Us young guys in the game really appreciate your words of wisdom and insight!

Love the input @Steve Babiak and @Chris K.!  

When the rent isn't paid I always follow the same procedure.  Getting a hold of the tenant is usually difficult.

1. Call and Text Tenant, Post Late Notice on their Door or Hand Directly to Them.
2. If I cant get a hold of the tenant, I will also post a 24 inspection notice that I am intending to enter the next day to do a smoke detector check and property inspection.  
3. If I still havent heard from them I will call and text them the next day as well and if the letters and all the calls don't get them in contact with me I will inspect the property as I posted previously.  Usually in that inspection I can see if they have abandoned the property or if they are still living there.  Most of my units are multifamily, so a quick talk with the neighbors usually leaves me with an answer to if they moved out or not.
4. If it appears that they have abandoned the property then I begin reminding them about the clause in the lease that states that they are considered to abandon the property I will reposes it after 5 days.  I do this via calls (VMs), text messages, and emails so I that have a record.
5. If after 5 days of trying to contact them in all ways that I can and even stopping by to try to talk to them at the rental I will reposes the property and store any items they have left behind as required by the law.  Then the process of finding a new tenant begins.

My attorney thought that was the best way to do it to help cut down on vacancy rates.  But like I said, I have never actually had to do this.  But thats currently my procedure if I ever need to use it.

I have never been in court regarding my abandonment clause.  My RE attorney told me that anything can be put in the lease and as long as the tenant is aware that they are signing away their state given tenant rights its an enforceable contract.  I just bought a building where the landlord had the tenants sign away the requirement for 8 day notice prior to filing an eviction.  

**I am not an attorney and am not giving legal advice.  Just relaying what my attorney told me for my situations.  Situations will differ from person to person so I HIGHLY recommend that you seek legal advice.**

Hope it helps!

I dont have personal experience with either, but I have tried to protect myself from both.

My application has a spot on it where they are required to list an emergency contact person who can assist in their move-out if they become deceased, hospitalized (long-term), or incarcerated.  My lease then states something to the affect that if any of those things happen we will contact their emergency contact and they will remove their personal belongings promptly and we will take back over the unit within X number of days.  If their contact doesnt remove their items we will store them (at their cost) for up to 30 days.

In your situation I would let the sheriff finish the eviction so its official.

Problem number 2 we handle by saying that if the rent is unpaid for 5 days after the due date and we are unable to contact the tenant we have the right to assume abandonment and take back over possession of the property, thus we can avoid the eviction process.  We also talk about storing their items that may have been left behind (at their cost) for us to 30 days.  Obviously if we dont think that they have abandoned the unit we would go the traditional eviction route.

I know this doesnt help you now, but adding some terms to your lease might help protect you in the future.

hey guys! Great question and honestly the reason I am answering is because it seems like you have thought this out and done some of your own research. I currently own 4 properties. 2 in my personal name and 2 in my LLC. 12 units total. A future SFR (my current home) in my name, a duplex (former house hack) in my name, a 5 unit property in the LLC, and a 4 unit in the LLC.

Your thoughts on the LLC and more restrictive financing has 100% been my experience too. I have a W2 job and a bank here that has told me they will write my LLC as many mortgages as I want as long as I bring 25% for a down payment. They dont care where the 25% comes from (my cash, 3rd party investors cash, seller carryback mortgage, etc), which is awesome that they are willing to let me get creative, but they also will only do a 15 yr mortgage with a 5.59% (the rate I got on the 4 unit last Nov., its higher now) and the interest rate resets every 5 years during the term. Pretty difficult to get any significant cash flow in my area on the smaller properties (hence why they are both in my name with 30 year fixed at under 4%). The LLC has a lot of benefits (asset protection, anonymity to some degree, etc.), but it also has a lot of drawbacks. The biggest one probably being the financing. The bank my LLC primarily works with is awesome because it is like a well of money that if I meet their requirements they will lend all day! When I was last looking for financing (in Nov) I wanted to make sure that I couldnt find a better bank now that I have more experience. I met with several commercial lenders from several local banks. Most werent really interested in lending to me on individual properties but would rather me refi and consolidate with me once I get a handful of properties. i.e. get 4 or so properties in the LLC and then they will put one mortgage on all of the properties (combining the collateral). At that time they were willing to do 25 year terms if I remember right it was with the same 5 year interest rate resets. I think what I like about the LLC is the lending restrictions actually requires me to find (and negotiate) great deals. It keeps me from not wasting my down payment money on mediocre deals. If I can get a good cash flow (running conservative numbers) on the strict 15 year terms, I will likely always be able to make the property cash flow under any lending environment. I also like the idea that in 15 years it will be all equity and I can 1031 it into a MUCH larger property. I do think (from what I have pieced together from listening to all the BP podcasts) that part of Brandon Turners strategy was buying in his personal name and then transferring it into his LLC after he has it financed in his personal name. I have thought about this with my SFR and duplex, but I am admittedly worried about the due on sale clause. I even called the one mortgage holder and told them I was moving the property into my single member LLC, which they promptly told me they only invest in residential mortgages and if I switch the title to an LLC they will call the due on sale clause. I didnt feel like pushing it, so I didnt change anything.

I am interested in hearing what others think and have experienced.

@Chris K.

Love the discussion and your point of view!  After interviewing a few lawyers I picked one to work with, but then again now that I am working with one I am only getting one opinion!  I love hearing your opinion on the matter.  Thanks for chiming in and would appreciate any further thoughts after you have had a chance to think about it some more!

@Chris K.

I have always had that in my lease.  When I reviewed my lease with my real estate attorney he loved that clause.  May it reduce what I can get from the landlord tenant laws? Possibly, but regardless of the damages you want in your lease you should spell it out in your lease.  When I have had tenants notify me of moving out before the end of the term I send them a copy of the page with this term on it (and their initials at the bottom) and I have always gotten paid the next months rent and given the security deposit.  I think this is fair.  I should be able to fill the unit within 30 days (I mostly rent in a rural area).  The additional 30 days (security deposit) covers the costs for me holding the utilities and the time involved in me showing the unit to several people in order to find a qualified candidate.  Regardless of if it reduces my protection available to me under the states landlord tenant laws I would much rather prefer to have it in writing, with the tenants signature on the document.  Taking the landlord tenant act to the tenant and trying to argue that you are going to proceed based on that (which they have likely never seen before) isnt nearly as likely to go well in my opinion.  And I dont think it muddies up the water at all.  If anything it clears up the water because both parties have agreed to the terms in writing and signed it.  I just bought a building that the previous landlord had all of her tenants sign a document waiving their requirement for a proper notice and an 8 day waiting period before she filed for eviction.  Fair, in my opinion, no, not at all.  When I showed it to my attorney he explained to me that the landlord-tenant act is only a set of rules to start with.  Any party can chose to waive the rights provided to them as long as they do it in writing it would supersede the law.  In my mind thats getting too close to the predatory side of things.

Long story short this language has saved me from unnecessary vacancy costs when a tenant decides to break the lease.  If you dont like it then feel free to omit it in your leases, but after seeing the benefits of it on several occasions I am going to keep it in my lease until I see it not work for me.

Add this term to your lease.

All parties agree that termination of this Agreement prior to termination date will constitute breach of the tenancy and all Security Deposits and one full months’ rent shall be forfeited in favor of the Landlord as liquidated damages plus the Tenant will be charged for cost of restoring the property to rental condition plus advertising and rent loss incurred until new resident moves in. Tenant’s liability for rent loss is limited to thirty (30) days after restoration is complete.

You now have it in writing at MOVE IN and its not something to negotiate if something happens.  I just had a tenant move out after 6 months.  I did all the correct screening and she meet my admittedly high standards.  When she moved out at the end of November she left the December rent check on the kitchen counter and I have the security deposit to cover January rent.  Hoping its rented by the end of January but regardless its better to have it in writing rather than negotiating it after the fact.  

That should help mitigate your future issues, but as of now.  I would try to negotiate something reasonable.  A few months and you can get back into the prime renting season.

Best of luck!

@Frederic Bull

is correct (according to my CPA).  I thought Jon had said he was single, but now I dont see that.  I must have read that from a previous post.

Jon, 

The gift thing is correct.  If you are gifted more than 14k during a tax season (Jan to Dec) then you have to pay taxes on it.  You could get $28k tax free if you got $14k in Dec 2016 and $14k in Jan 2017.  

IMPORTANT NOTE: I AM NOT A LAWYER OR TAX ADVISOR, JUST MIMICKING WHAT MINE HAS TOLD ME.  

I did something very similar to this and my parents opened up their HELOC for me to use to invest with. My advice is to create an LLC. Write up a note that says you promise to pay back the entire principal plus the interest that your parents HELOC costs them on time. We never 'recorded' ours, but at the very least your parents have it if something catastrophic were to happen to you then they can try to get their money back from your estate. There are no gifting limits to an LLC (that I am aware of), they can give you as much money as they want and demand that you pay them any interest they want (i.e. they dont have to make money). Thats what I have done and it is working out great for me! Really helped me grow. Every situation is different, but if my child wanted to do this I would want to see a track record of desire to get started in this field backed up with some personal savings showing that they were serious about it. My 2 cents. Hope it helps you and best of luck with your plan!