All Forum Posts by: Michael Peters

I'm sorry to hear about the situation.  It sounds like you got scammed for a placement fee (I assume that's all the realtor was hired to do) and you have a bum tenant who may need to go.  Below is reflective of Iowa rental law so double check your state's requirements.  It may be a bumpy ride for a bet.  Also I'm not a lawyer.

Immediate steps 1) Post a 3-Day notice to the tenant for unpaid rent 2) Post a 7-Day notice for the utilities not being in there name and missing renters insurance (I assume both of these are requirements in the agreement) 3) If the tenant is on auto pay I would require payment in full going forward with Certified funds.  (make sure this is allowed in your state and/or lease) 4) Get yourself refreshed on local eviction laws and consult with an attorney if needed.  5) Prepare yourself for another short rent payment in June

Regarding the Agent 1) I would start by reviewing your placement agreement and seeing if they did violate the agreement.  If they did blatantly violate the agreement or lied about the tenants qualifications you could have a case to refer them to the local License Review Board and/or a small claims suite for damages. 2) Request copies of all documentation and notes used to vet the tenant in a certified letter with a 10 day response request. 3) If you do get this information I would double check it all and call prior landlords to confirm the information you were provided prior to the lease signing was accurate.  4) From there it is a matter of leveraging the threat of what sounds like a justifiable complaint which would jeopardize their RE license or a small claim to recover damages.  5) Make sure anything you sign going forward is reviewed by an attorney and all communication is documented.  

Next Time 1) If you have a small portfolio I would recommend finding tenants yourself if you are local.  It takes a lot less time then you would imagine and there are plenty of free posting sites to generate interest.  No one will ever care about vetting that tenant as much as you and its a great learning experience.  2) Keys should never be handed over until you have copies of all utility transfers and verified, renters insurance, rent for the 1st period due, pet insurance/vaccinations or any other its required in your lease.  If a tenant shows up without it they don't get keys until it is provided.

Hope this gives you a direction to start.

Would the new deal help generate enough equity to justify all the work you already put in or would it just delay your cashflow timeframe?  I'm in more or less the same boat and have avoiding selling at all costs.  The first few are always the hardest.

@Chris Evans I'm actually in about the same position and would appreciate learning about your strategy as well. My only difference is I currently have my first BRRRR rented and I'm looking for my next project while I rent.

@Zach Fulton can you share the listing link?  Ricardo's priority list is pretty accurate the a normal slow renovation but it depends on the overall condition.

Do you plan to complete a live in flip over a year?  Do you want to wrap up everything on your list in 2 months and start renting?  Your end goal would help to determine how to handle everything.

I'd just work with USPS and set up two mailboxes.  Typically the simplest solutions are best.  I'd just call this one a nice win :)

I've inherited and passed along more properties then I can count and learned some valuable lessons.  Doing this the right way can create a seamless transition or cost you the "savings" potential and more.  Here are some things I've learned.

If you have the time capacity and plan to scale up this is an invaluable experience.  You will learn more then you can imagine which will pay dividends down the road.  I would also recommend giving simple maintenance a try.  Youtube is amazing and I guarantee a few small repairs will save you more then the cost of the PM.  Also having the ability to walk tenants through something simple like resetting a garbage disposal or diagnosing a tripped GFCI.

The above comments are correct about reading through your PM agreement to ensure there aren't any associated fees.  Many have a notice period or may even require you to pay out the remaining months in current leases to exit.  Don't forget they still work for you until the contract ends.  Many PMs will shut down once you put in your notice so you will have to stay vigilant. 

They will more likely then not help with the transition.  Your biggest priorities will be getting all the property and tenant information.  Past/ongoing Maintenance requests, applications, leases, property condition catalogs, move in photos, relevant communication, city inspection certificates, ect.  Not getting this information from your PM is not negotiable.  Having a trashed house at the end of a lease and zero documentation can easily leave you on the hook for $10K for just new floors and a repaint.  

Well before the transition I would also advise you walk the property and speak to the tenants.  You want to inspect the current condition of the property compared to the condition catalog and ask about past or ongoing repair requests.  There very well could be a list of partially repaired items.  Many tenants will also send in a list of repairs or wish list after transferring PMs that you want to be prepared for.

Then being proactive with the tenants and getting everything switched over. Having a website to process payments is also key. I use apartments.com but any should work just watch out for extra tenant fees for processing payments.

Your biggest challenge will be setting up new expectations with the tenants. You very well may need to establish new ground rules. I also am in favor of presenting yourself as the manager instead of the owner. One easy way to separate yourself is to great a new google number and email for your PM company. Even creating a DBA "doing business as" will allow you to operate under a company name with little cost and hassle. If the current lease has set availability times I try to stick with those or you can see if they will sign a new lease. I would avoid trying to do a rent hike and use it as a chance to simply update contacts and simple policies.

I have a 1 month grace period with pests and plumbing.  After that it's on the tenants.  Are these multifamily doors or single family homes?  Many Associations will complete proactive exterior pest control or you could push for such a service through your boards at a greatly decreased price.  While adding this service may be a plus for the tenant I haven't seen this make or break any good renter or provide the value to offset the expense.

The property may have been listed incorrectly by the seller but that doesn't change any facts around the ownership transfer.  USPS should be able to handle the updates if not you can add two mailboxes or house numbers to help the delivery person.  Looks like you can subdivide the plot for $500-$2000.

Is there a reason you are considering selling the smaller unit vs renting both out?  

@Hamp Lee III has some good recommendations.  I would agree that you should start with Rich Dad, Poor Dad by Robert Kiyosaki and Think and Grow Rich by Napoleon Hill.  Even if they never move into RE this mind shift books can change your life.  

If they like those introduce them to the biggerpockets podcast or youtube channel.  It's a wealth of free, regularly updated knowledge which can give them a taste for the industry and help nail down some interest points.

Don't waste your time with the HOA. Dealt with a few of these and they will most likely say their hands are tied. Call the police every time another incident occurs. Document everything. We actually were able to use footage from a neighbors ring doorbell to get a restraining order and force the dangerous neighbor to leave.

If the stove fits with the other appliances and is in good shape I would repair and charge the tenants from their deposit.  If you need to purchase a new appliance charge them a prorated amount for the new one and any related expenses.  Make sure to break out how you came to that amount in your deposit disposition.  I would use a 15 expected life on the stove.  If its older then that only charge if there are extra expenses outside of it they had just told you up front.  Consider adding a clause in your lease agreement around unauthorized repairs to cover yourself in the futur.e