All Forum Posts by: Bryan Montross

 That's great Marcus. I'm glad the community was able to help you make a stronger lease to avoid issues later in your investing career and that everything worked out for this situation. Best of luck moving forward.

This just shows the importance of the contracts we put in place. All of my leases state how payments from the tenant will be applied. I always apply rent to past due amounts, then late fees, then current amounts due. This is spelled out so we don't have issues. My property management agreements have similar language. Again, so there are no issues. The contracts are always negotiable, and if you don't like the terms than you find someone else that will give you the terms you like.

I don't know if there is a set standard for how a security deposit is applied. I have seen it both ways and I think from the responses above many people here do not agree on a set standard. If this is something that bothers you enough, then try to renegotiate your contract, or find a new manager that has the terms you want. Also, think about the likelihood this situation comes up again and the cost it is to you, especially if the manager is doing a great job everywhere else. If they are worth the money, then just know this is how they do it. If not, again, maybe look somehwere else.

I agree that you need to have something in your lease stating that it is not a valid lease until the security deposit and first month's rent are paid. Or have a separate contract as Wesley W stated.

What was the outcome of this situation? Did you talk to a lawyer or just remarket the property? Or did the tenant actually move in? Just wondering what action you took after getting BP advice and how it worked out for you. Thanks.

@Jim Bouchard I think you already got the answer I am going to say, but I am also curious how the situation has progressed and what you did. I would let the upstairs tenant know that they have done the right thing by talking to their neighbor. If the downstairs tenants are not yelling on the phone, purposefully slamming doors, playing loud music, etc. then it doesn't sound like they are breaking the rules. I would probably talk to or send a message to the downstairs tenant to let them know that although they may not be breaking the rules, their noise is carrying upstairs and for them to just be conscious of that fact when they are up late. Let us know what you ended up doing and if you have heard more from the upstairs tenant.

Let me address some of your questions about operating this type of setup. First, I did put in a second HVAC to control the temperature upstairs separately from downstairs. Second, I pay for all utilities (Electric, Gas, Water, Yard Maintenance, Internet, etc.) and have it included in the rent price. Actually, I have a base rent price and an additional utility fee. That will make it easier for renting the long-term rental for sure because you can advertise the base rent, which is comparable to market rent, and then state that utilities are included for the utility fee. Finally, you just need to have a good set of house rules that both upstairs and downstairs get in their lease. This will help alleviate some of the tension between tenants. In the end, you almost have to treat it like an apartment building and how tenants have to deal with their neighbors. I hope that helps if you do decide to go this route.

If you are going to make the offer without ever seeing the inside, go with public records and run your comps from that. Also, since you won't know the actual condition of the property, you'll need to account for that in your offer. It will be a really low offer compared to what he is looking for.

Another option is to price it the way the seller is telling you, with contingencies giving you the chance to back out if the house is not the way it was told to you. Then if it is only 2 bed instead of 3 you can renegotiate price or back out. Once it is under contract you need to be able to see the inside of the house. If he doesn't let you in, I would back out and not take the deal. You'll also want to know what the terms of the lease you are inheriting is and decide if you are OK with that.

And sometimes, it is good to just walk away and put your effort into another deal that might make you as much money for less effort.

I agree that working for a PMC would be a great idea, but here are a couple other ideas. You could look into classes to teach you about property management. Some states require you to be a real estate agent, I think some even require you to take property management courses. Either way classes are good to take, but you'll never learn as much as doing it. Another thing you can do is treat your current activities as if you are an external PM. This will help you to build your systems out as well. Sign a PM agreement between you and the PM company. Send out owner statements to yourself. What are all those things you would expect from a PM? Do those for yourself until you are happy things are working, the maybe start branching out to other people's properties. Those are just a couple different ideas.

Here are a couple of my thoughts:

1. I don't think you need to meet the tenant in person if you trust your screening process. Just know that most screening processes show you the numbers, but not the character. Really ensure you are talking to references in this case to understand the person.
2. If I am the property manager or managing the property myself I try to find a time to meet the tenant in person. Maybe this is the walk-through inspection. Sometimes it is just a pop-by a month or two after they move in to see how they have treated the place so far. Giving a small token of appreciation can start the relationship off well, show you care about the property, show you care about the tenant, and just be a great way to introduce yourself. It could even wait until it is getting close to lease renewal and you do an inspection to know if you want to renew the lease. But I do try to meet them sometime during the process.

Do talk to your CPA as timing does matter. Just because you have moved out and plan to turn it into a rental, the repairs may still have different tax consequences if you haven't "placed it in service". And make sure your CPA really understand rental properties and has rental properties of their own. It makes a huge difference in their understanding.

In my area, buyers are looking for stone countertops and now the renters are starting to look for it as well. I almost always put in stone. My stone countertops have lasted longer than any of my laminate countertops as well, so I tend to stick with it.

If you're worried about sealing the granite, I have that as a checklist item during turnover so I don't worry about having my tenants do it. If they end up being longer term tenants I will ask them to do it at certain times. If you're worried about a tenant putting a hot pot on the counter, stone is better because it is naturally heat-resistant. I have never had issues with a stone countertop, but I have had burn marks on a laminate counter from a tenant setting a hot pot on it without a trivet.

With all that said, I would really just go with what the market wants. If laminate is good enough and you still get market rents, go with it. Sometimes putting in the granite will not get you additional rent, but just costs more. I personally would still go granite, but I have used laminate as well based on the place.