All Forum Posts by: Wesley W.

@Jeff B.

Thanks for your input, guys.  I've read dozens of each your posts, and I respect your opinions.  Although I was looking for more of a consensus, I guess what this tells me is "to each his own" and there is no preferred way.

Hello all,

We have a few units in our small multi-family portfolio that we are considering raising rents outside of tenant turnover.  I'm interesting in hearing from the collective experience on here if it's more palatable to the typical tenant to have their rent raised by say $5 or $10 each year, or at least double that every other year?

In other words, are small, more frequent increases met with less resistance than larger jumps at longer intervals?

Here in NY, our taxes and insurance (as well as other expenses) go up by a not insignificant amount every year, and we have to be mindful of this on our long-term tenants, lest our cash flow erode away.  I know the cost of tenant turnover is a cash flow killer, but if we neglect minor rent increases to keep up with expenses, will the "sticker shock" of a big hike every other year create more turnover than a minor yearly increase?

Locally, it's not uncommon for landlords of C properties (like ours) to not raise rents on tenants during their occupancy, and to hike rates only upon turnover.  All our tenants are on month-to-month agreements.  

Thanks in advance!

I think even trying to mediate AT ALL sets a bad precedent and expectation that that is your role as the landlord.  

I had this same question last year and my mentor gave me some advice that I presume to pass on now.  Tell them "from jump" in a diplomatic but firm manner - they are all good people ("otherwise we wouldn't have selected you to live here"), and they need to be able to work out these issues amongst themselves.  "If I have to get involved, it wouldn't be good for anybody."  This last phrase, depending exactly how you deliver it, we convey all kinds of subcommunication to your tenants.

@Reid Schieler

Congrats on starting on your RE investing so young!  If we all knew then what we know now...*sigh*

This is NOT legal advice and is just my opinion based on my experience and research. I was told by my attorney and CPA to hold assets in an LLC for liability protection, so we formed a few LLCs with that intent.

Since "banks don't loan to LLCs, they loan to people," the plan was to transfer title after closing to one of the entities. The concern is always the "due on sale clause", but my attorney assured me this was a very low chance of happening on a performing loan unless the interest rates started to get ridiculously high and the lender could see a way to get a better return. Also, he said he could argue the bank doesn't have any damages, and since the LLC members were the same people as the owners (whom personally guaranteed the loan), it should not be a great concern. He also said if the bank still pushed the "due on sale" issue, we could simply move it back into our own personal names as a cure. In our market, I know of no one who has ever had an issue with the strategy, nor has our attorney. However...

...we chose ultimately to keep the properties in our own personal names. Aside from the possible legal fees associated with the above, as I shopped for insurance I found that the premiums were higher (sometimes TRIPLE!) for LLC-held properties, and that would eat in to our cash flow significantly.

After consulting several investors with large buy-and-hold portfolios in our REIA, we decided to get a large commercial umbrella policy at this point. In the future, we may revisit the LLC model.

Hope this helps!  Good luck!

I big "NO."  Remember, an empty unit is better than an occupied unit with a bad tenant.  Tenants are supposed to be on their "best behavior" during the application process, putting themselves in the most positive light possible.  It only gets worse from here.

It sounds a bit like you are trying to rationalize the situation in order to fill your vacancy.  Remember, you are running a business, and there are prospective tenants out there that deserve a clean, well-maintained place to live.  They're just not always the first person through your door at a showing.  

Thanks for the input, everyone.  I'm leaning towards Option #1 after I talk to the case manager and utilities company.

@George Smith I'm in your jurisdiction, and I was told by two different attorneys that a workaround would be to check your account daily, and if a partial payment were to show up, debit that exact amount by cutting a check and mailing it back to the tenant via certified mail with a letter stating you are refusing the partial payment and telling them to cease making such payments.

@Carlos Enriquez Yes, despite no therms being used, the utility (National Grid) still charges a monthly fee.  Why do they?  Because they have the PSC in their back pocket and they can, I imagine.  Note how inflexible their service call schedule is.  They are the 400 lb. gorilla.  If I could switch to another company, I would in a New York minute.

It doesn't cost the customer anything to send the tech out.  So, zero cost there.  I wouldn't do this at all if it were any monetary cost on my end.

I've thought of adding a gas appliance, but that would involve doing a fair amount of work to plumb gas lines into existing walls (they are on the second floor), which seems to violate the KISS principle.

So, they say the definition of insanity is expecting different results by doing the same thing.  I'm looking for others' experience and advice with regard to my latest question.

A tenant has requested of the utility company that his gas service (his unit's heat, only - hot water and range are electric) be disconnected in the spring and reconnected in the fall in order to save the monthly "connect" charge when he uses zero therms.  If it matters, this tenant is also on both Section 8/DSS, so I am assuming that one of those entities is paying for his heat.  (The cynical side of me suspects he is getting funds to cover 12 months of heat, and he is pocketing the difference - just a thought without any proof.)

On the face, this looks financially prudent, but it has become a major PITA for me.  His gas meter is in the basement (which is locked and off limits to tenants), so the utility needs me (or someone I trust) to let them in.  They only schedule these service calls during 8-4pm weekdays (I work a full-time day job.) with an 8-hour window, so I am unable to provide access except when I have the day off.  They cannot guarantee when the technician will show up during that 8 work day, so it's not practical that I can leave work early to meet them there on a particular day.

I've tried to make this a bit easier on myself by putting a combination lock on the basement door and when they call for the "we'll be there in 20 min" warning, someone can give them the combo, which I can later swap out after the service visit for security reasons if I choose.

The issue I have run into is that "technically" (citing company policy) I have to be present for them to gain access and do the connect/disconnect.  So far (twice), I have run into techs that have given a bit of pushback, but I had the contact person provide some subterfuge about why they couldn't make and could they "just go in there without me?  I am stuck in traffic/family emergency/car trouble/etc." and they relented.  To me, this is not a good long-term plan.

So, here are my options as I see them.  Please feel free to comment on my concerns or offer another solution.  I assume I am not in a unique position amongst the BP populace.  How do/would you handle this with your tenants?  Thanks in advance!

Option #1:  Tell the tenant that because of the utilities' service call inflexibility, I can no longer provide them access during business hours and therefore they must leave their account active all year.  (This would probably require an amendment to the MTM lease, and might piss off the tenant.)

Option #2:  Allow the tenant to provide access via the combination lock, with all of the liability  and "potential for nonsense"  (theft/vandalism/whatever) that it would expose me to.  (I have avoided this option thusfar, because I think it would encourage the tenant to feel more entitled to this service that I am not completely comfortable with.)

Option #3:  Continue with the status quo of the scheduling mess this creates for my life every 6 months.  (Not practical, which I why I posted.)

Option #4:  Hire a PM "a la carte" for this express purpose.  (Not worth the cost, in my opinion.)

Okay, folks.  I need your collective wisdom/input again.

Short version: Property under contract as buyer. We do structural inspection, find major issues, seller does not want to negotiate so we cancel contract under "inspection contingency." Seller refuses to sign Cancellation & Release letter so we can get our EMD back.

Other facts...seller does not have a realtor (used a third party vendor to put on MLS); money is being held in escrow by his attorney. Seller lives in FL (property is upstate NY).

My attorney says I am SOL.  He says the only way to get it back is to sue him in small claims court, which he says would have to be done in FL where he lives.  I can't even tie up the property and preclude him from entering into another contract, according to him.  My realtor says if he never signs, the money stays in attorney's escrow account "in perpetuity."

I find it hard to believe with all these attorneys/realtors attached to a transaction like this there isn't an easier mechanism to get my EMD returned.

Does anyone have any other way to get my money back?  I mean, why even have a contract if they are going to blatantly ignore it, yet have no real consequence.

Thanks in advance!