All Forum Posts by: Michael K.

I'm ready to begin investing outside of my home state.  I know that some states and areas (California, NYC, Portland) absolutely favor the tenant at the expense of the landlord.  What are the best states for landlords?

Thanks,

Mike

If you get very serious about purchasing, there's an excellent book called "Coin Laundries - Road to Financial Independence" by Emerson G. Higdon. It is out of print. I paid $50 for my copy when it was in print and have seen people pay $200 for a copy. It's absolutely excellent and does a high dive into the VERY deep end of the coin laundry pool, including a lot of mathematical and financial analysis.

Google around- sometimes they pop up at independent used book sellers for $20-25. Amazon is normally $75+ when they are available.

Full disclosure: I am not associated with the author and have no financial interest in whether you purchase this book.

Mike

You'll find that being a jerk to a jerk usually results in fun responses like damage.

Lots of damage.

Damage that may not even be entirely covered by a double security deposit. Sure, you'll get a judgment in court. But is the judgment collectible? Garnishable? Is it even worth the paper it's printed on?

Don't lower yourself to the tenants level. If he's causing problems to the neighbors, have the neighbors call the police. If the yard looks like junk, send a notice to clean it up or you'll clean it up. If you have to clean it up, take it out of his security appropriately.

Follow the law as it's written. Give legal notice to get the %$#@! moved along. But torture your tenant at your own peril. It's seldom worth it, especially if your time is worth anything.

Mike

That's a good link, but here's a thought.

How much did that water episode cost? How about the building itself?

I found an excellent real estate attorney who specializes in landlord/tenant law and paid him 400.00 cash for two hours of time. I came prepared with a LONG list of questions about landlording rules and laws. My last question was "What should I know that I don't know enough to ask?" The answers my attorney provided have saved me easily 10x the amount I paid.

I also had him review the state boilerplate lease and asked "What should I change, add, or remove?" I ended up handing him another $200.00 and he created a few addendums to the lease that have saved me a LOT of trouble.

600.00 to secure your investment is peanuts. I strongly advise you to consider time with an competent real estate attorney. Start with two hours of time and get more if you need.

You're on your way with the boilerplate. But get those two hours- they're beyond valuable to you and to your future success.

Mike

1. Too many potential buyers / bidding war. People lose their heads and emotion takes over. That leads to an unprofitable price.

2. Environmental messes. We've got issues up here with USTs (underground storage tanks) for fuel oil and the like. By law, owners have to disclose even if there was previously a UST on the property that was properly removed. That branding scares away potential buyers- bad for you when you're trying to sell. If there is a tank in place, it falls on the owner to have it removed when it's no longer used. Good luck and you'll need a fat wallet if the tank ruptured. Removing contaminated soil to government specs is beyond expensive. Multiple bureaucrats assigned to oversee the project often present moving targets for acceptable remediation. Moving targets make budgeting all but impossible.

3. As above, but if there used to be a gas station, drycleaner, etc., there long ago. Our environmental regs suck- I'm not in a place to accept that sort of financial risk at this point in my career.

4. Ghetto. Good for some people but not for me. I don't want to deal with it. Yeah, this is leaving money on the table- but it's money that I consider too expensive to earn.

5. Some title issues. It depends upon the issue, but deed restrictions can invalidate the best and highest uses for a property. Back taxes and liens can also take a great deal to a horrific deal.

Other than that, I'll raise an eyebrow but don't automatically run for asbestos, lead paint, bad basements/foundations, stigmatized property, etc.

Mike

I wonder if this is more than scrap- i.e. being resold as a used door?

Mike

So no earnest money has changed hands and you haven't signed HUD's official papers yet?

This is a good thing.

I'd explain to the listing agent that you aren't signing and aren't turning over a penny until you have, IN WRITING, either a price reduction/credit or a guarantee that the repairs will be completed prior to closing at seller's expense in a workmanlike manner.

I give it a 50/50 for which way HUD will go.

Incidentally, I've been dealing with metals theft frequently. You may be better off with the credit/price reduction. Those can't be stolen (a second time) prior to closing.

Mike

You've never dealt with a 1.5, 2.5, etc..? I thought that was everywhere- must be a WI thing..? Or maybe it has a different name elsewhere?

Basically, it's a 2-car garage with half a car's worth of additional space for mowers, snow blowers, motorcycles/snowmobiles, and other stuff. A straight 2.0 car garage will fit 2 cars and anything else is a very tight squeeze- if it'll fit at all.

Mike

Hi from a Wisconsin-licensed real estate broker.

Question- what was the purchase price of the property, and how much will repairs cost?

The answer is very important because it directly determines your and the seller's rights under a Wisconsin WB-11 Offer to Purchase.

Take a look at the boilerplate on page 4 of 9, lines 206-211. I quote:

PROPERTY DAMAGE BETWEEN ACCEPTANCE AND CLOSING Seller shall maintain the property until the earlier of closing or occupancy of buyer in materially the same condition as of the date of acceptance of this offer, except for ordinary wear and tear. If, prior to closing, the property is damaged in an amount of not more than five percent (5%) of the selling price, Seller shall be obligated to repair the property and restore it to the same condition that it was on the day of this offer. No later than closing, Seller shall provide Buyer with lien waivers for all lienable repairs and restoration. If the damage shall exceed such sum, Seller shall promptly notify buyer in writing of the damage and this offer may be canceled at option of buyer. Should Buyer elect to carry out this offer despite such damage, Buyer shall be entitled to the insurance proceeds, if any, relating to damage to the property, plus a credit toward the purchase price equal to the amount of Seller's deductible on such policy, if any. However, if this sale is financed by a land contract or a mortgage to seller, and insurance proceeds shall be held in trust for the sole purpose of restoring the property.

So, is the damage greater or less than 5% of your purchase price? That answer determines your rights under Wisconsin law.

If you didn't use a standard Wisconsin form, these rights may not apply. Your recourse may be to demand satisfaction through the listing broker. This is not always so easy.

STRATEGY: If it's less than 5% of cost, I'd send a note to the listing broker demanding repair whether or not I used the state forms. They might be bamboozled enough without the forms to get HUD to handle it. If it's over 5%, I'd do what every other buyer does and overestimate repairs. If you think it's going to run $500, demand $2,000 in credits / price reduction and settle for $1,000. You might as well make an annoying situation work to your benefit!

While the feds are nothing but a bureaucracy, Wisconsin is a very consumer-centric state (for once, that benefits us!) and HUD isn't known for being into ripping off potential buyers. I think that you'll be fine here.

Sincerely,

Mike

Not in that area.....

Mike