All Forum Posts by: Marcia Maynard

I started owning rental properties 18 years ago when I married my husband and my father-in-law said "Welcome to the family business!". His exit plan was to sell his properties on contract. He sold one of them to us and that was our start. It's a win-win. He still has stable income coming in and no longer manages properties. Grandpa is in his late 80's now and likes to plant flowers and vegetables for our tenants... the personal touch.

Owning and managing residential property takes a certain type of personality and commitment. It's not for everyone. We enjoy providing a service that meets the housing needs of others and that makes all the difference.

My husband and I work full time in our professions and run our rental property business on the side. As such, we hire out most of the maintenance work, but continue to manage the properties ourselves. We buy and hold and took the slow approach to building our portfolio, with the intention of generating cash flow to supplement our retirement plan.

I see the greatest risk being that of liability. In this litigious society you can never be too careful. Substantial protection can be obtained with a good fire policy and good umbrella policy. Keeping properties well maintained, following the law, and being proactive by mitigating risk is most important. A comprehensive rental agreement can serve you well. We also partner with local law enforcement to keep our properties and communities safer. More than once a police officer has thanked me for being attentive and involved in what happens around our property.

Our biggest surprise was the sudden death of my brother-in-law who was one of our partners. We didn't have an LLC at the time and weren't prepared. The property had to go through probate... a costly and cumbersome process. We now have two LLCs that define how we run our business and what will happen in the case of the death or incapacitation of one of the owners.

My husband and I have 3 units in an LLC partnership with family members and 12 units in an LLC of our own. We have some properties paid off and are enjoying the positive cash flow. At this point we are reinvesting the profit back into the business.

We only buy properties (houses and plexes) in stable neighborhoods close to our home, so it is unlikely we would be caught off guard by changes in the area. At some point we will sell off our properties and will most likely realize a profit, but for now we are benefitting tax wise and they are our golden goose... still laying the golden eggs.

There may be no need to sway her to your way of thinking. I have bought houses such as the one she is considering and have faired very well. For me, having my rental property close by, in the neighborhoods familiar to me is important. I let a house rent for a little below the market rate for a retired single woman on fixed income who takes good care of my property and loves her home. Couldn't be happier. Some people live a long time. No turnover. Nice.

I can relate to your mother's view. It may be her intuition that is guiding her and not emotions. You may share your thoughts with her, but be respectful and consider she may not be making a bad decision. She of course will need to have a management plan for rent collection, periodic inspections, maintenance needs and to address any issues that may come up. Maybe you or her gentleman friend could help her with that.

Due diligence with your inspections of the property is key and can help you negotiate better terms for purchasing, so you definitely need to see inside each unit. It's helpful to read the terms of the leases/rental agreements of the previous owner to gain insight on tenant expectations. But if there are no written agreements in place it won't much matter in the long run. Don't worry about it. Our lender has never asked to see a lease agreement on a residential property. The rent registers and income history on a property are more telling.

When we buy an occupied property we move quickly to have the tenants sign our own rental agreements. With residential properties we prefer month-to-month rental agreements. No need to ask for tenants to sign a lease with a previous owner before closing. It would complicate the situation more if you did.

Once you have the property, make a fresh start with the tenants. Start with a warm letter of introduction and don't raise the rents immediately unless you want the tenants out. Those long term tenants might appreciate a more stable written agreement with you as the new owner. Well written rental agreements protect both parties.

George,

Number one, know and understand the landlord-tenant laws for your state/county/municipality that are applicable to you about the handling of security deposits. Most likely you will need to provide the tenant with a full and specific statement of the basis for retention of any or all of the deposit by a specific date.

If you can get all of the work done prior to that date and have receipts, great. If not you will need to get reliable estimates. You can find a number of examples of lists of common charges by browsing the internet. One of my favorite tools is the HD Supply catalog, as it gives prices on almost every item imaginable that could need replacing. We are allowed to charge a reasonable amount for our own labor. Find out from local landlords what the courts in your area are likely to find reasonable. We can easily charge $20 - $30 dollars an hour for our labor without any push back from the judges. If you hire professionals, you have the benefit of having the work done professionally at professional rates and paid by the tenant if the security deposit was enough to cover it.

Next time, protect yourself and your investment by setting into place a comprehensive rental agreement and inspect your property on a regular basis. We do seasonal maintenance inspections and try to nip problems in the bud. We will check in on new tenants more often during their first three months, as most tenant problems will surface during that time.

All the best!

Marcia

Some states require the landlord to provide window coverings, some do not.

We too provide horizontal mini blinds for windows and vertical for sliding glass doors. We also put a good quality decorative rod up in the living room and basic double rods in the bedrooms. The reason for a double rod in the bedroom is so the tenant can put up shears for light/privacy and other curtains for decoration or to make the room dark. It's a minor detail that tenants like and the difference in cost is hardly anything.

So, I'm not the only one with a box of curtains available for tenant use! Its an easy added value and not much of an investment when you shop garage sales and thrift stores. Just be sure they are laundered well.

Welcome to the business. You need to know and understand all of the residential rental laws for your state/county/municipality, follow them and seek legal counsel as necessary. When there is a change in ownership of residential property there are procedures to follow. One is to establish your relationship with those occupying your properties.

Did the previous property owner turn over the rent files to you? Did the previous property owner have rental agreements in place with all of the people occupying the premises? How does your rental agreement differ from what the tenants are used to?

Either get a rental agreement in place or evict. You need to remove these people from your property by legal process. That means eviction. You can not boot them out by changing locks and moving their belongings. Think about your personal safety too. You must consider the concerns and safety of your good tenants (I trust you have a rental agreement in place with them) as well as how you will attract good tenants to the property for the empty unit.

Have you seen the movie "Pacific Heights"? I recommend you do. It's a thriller about the experiences of a couple who are new to landlording. Entertaining and educational. Good luck!

I appreciate all of the comments. The hazmat part of it had not occurred to me. Wow! Why did the attorney recommend doing an eviction? If the person listed as a tenant's emergency contact does not have legal authority to address the disposition of the body or the tenant belongings, what next? Have you heard of people looting an apartment after a death? Family members taking what they want at will? I understand I would first need to call the police/sheriff, let the authorities do their part, and secure the property. Notifying next of kin seems to be within the role of the police/sheriff. What falls within my role as landlord? What else?

A fireplace can add to the charm of the home and charm sells.

We have four duplexes with wood burning fireplaces. Plus one single family home with a wood burning fireplace. That's nine fire boxes, nine flues and 5 chimneys. Nothing to fear if all is in good shape, well maintained, and the tenant uses it appropriately and safely.

Hire a qualified professional to clean, inspect and repair the fireplace and chimney. Get a chimney cap if it doesn't already have one to keep critters and weather out and flaming debris in. Teach your tenant how to use the fireplace as you would any appliance. We address it in our rental agreement and also give the tenant a brochure on fireplace use and safety.

If the fireplace is not well built or has deficiencies, take it out of commission. If the tenant does not follow the rules for use, revoke the privilege. We don't live in a cold climate and these units have good centralized heating, so our tenants tend to use the fireplaces minimally, if at all. When they do, its for the ambience. On my periodic inspections I sometimes see candles set up decoratively inside the firebox and stockings hung by the chimney with care. Charming!

As always, maintain your fire insurance policy.

I personally know of three families who were renting houses from landlords who let their houses go into foreclosure, collected and pocketed the rents and never said a word to the tenants. The tenants found out when foreclosure documents were posted on the front door. Shameful. Some states have passed new laws to address this issue.

Joe, that sounds like a new topic. A good one too. If you post it as a new topic, I will reply.