All Forum Posts by: Wesley W.

Oh, and it's a shared yard if that wasn't obvious.

Hi folks,

I once again seek the collective wisdom of experienced landlords.  I own a small multi-family building, and here is the text I got today:

"Listen I'm having a BIG problem with the other tenants kids and cats ruining my daughters pool... Now this is the third pool this season I'm buying because the last two have been destroyed by these kids from upstairs and the kids next to me too... Please tell these people to leave my stuff alone.. Cause I'm at wits end with these parents letting these kids get away with anything."

He's referring to those inflatable pools about 8 ft. in diameter that hold a foot or so of water.

How involved would you get?  How would you address it?

Thanks in advance!

Hello All,

We're a week or so away from closing on another small-multifamily property that is, for the most part, (2 of the 3 units) occupied.

When we put in our offer, one of the units - a first floor apartment that takes up 50% of the square footage of the property - was vacant.  The PM (acting as agent for the seller) was in the process of screening tenants to place in the unit.

We asked them to "hold their horses" as we wanted an opportunity to find an screen our own tenant and would use our own MTM lease agreement to establish their tenancy.  The PM said he was willing to use our application and lease to place a new tenant.  We agreed, but were very specific that we wanted a MTM agreement only, NO LEASES.

Well, during due diligence under attorney approval we had the tenants fill out estoppel agreements, where they disclosed they were on a year lease that began when they took occupancy this month.  Prior to that, the "signed" lease agreement (ours that the PM used) was faxed to us, and the "term" field was left blank.  I assumed they were just being sloppy (which I see very often with sellers and their paperwork) and didn't fill it in because it wasn't a lease.  (I always fill it in for 30 days hence with my tenants upon signing.)

So, bottom line is that the PM either misunderstood our insructions (which I find hard to believe because we couldn't have been more emphatic about not having any year leases) or - more likely - he was worried he couldn't acquire this tenant without a year commitment.  Basically, obligating us to that term since the property was under contract.

As an aside - I opened with "2 of the 3 units are occupied."  Since we were under contract, a tenant vacated one of the upper apartments and we asked that it be left vacant.

Also - our local MLS contract does NOT have a stipulation that the seller may not enter into new agreements with tenants without the buyer's written permission (as I have seen in other markets).

My concerns are that this seller is marrying me to this new tenant from out of state, not vetted by me, and no payment history in this property.  And his unit comprises an inordinate amount of the rent for the entire building.

I'm not sure what I can ask the seller for to make up for this new increased risk.  Obviously, the tenant may now legally possess the apartment through June of 2016, and maybe he won't be a problem, but it's introducing another variable into my attempt to have a performing property.

I don't think this is a "deal killer", but I'd certainly be more comfortable with some type of overture from the seller to mitigate this situation.  Not sure what that would be.

What to do you think?  WWBPD?  ;)

@Rob BelandI didn't think raising my liability limits was practical, since it would involve no less than 9 discrete policy adjustments.  Just too much to keep track of.  Was looking for more simple solution.

@James Vega I've heard all sorts of great things about USAA.  Unfortunately, having no military affiliation, I don't qualify for a policy.

@Kirill Chervets I was trying to avoid placing "all my eggs in one insurer's basket."  I had a very bad experience with an insurer bait-and-switching the policy premium after I cancelled my old company but within their regulated 30-day period after the onset of coverage.  Having a distrust of the entire industry is an understatement, and I'd rather not give any one entity that much control if I can avoid it.

Thanks to everyone for your thoughtful input.  I've written down a few more companies to vet.

@Rob Beland I've called several local brokers, but I didn't list them because no one outside my area will have heard of them.

@Lynn Currie To clarify, I have separate insurance policies on these assets (up to $300K), but I'm looking for a policy to cover our liability beyond these limits.

I'm assuming one umbrella policy could be written, with the premium determined by the number/type of assets that might incur a liability claim.

Because of numerous lender issues with LLCs, I've decided I want to try and protect my assets with an umbrella policy, for at least the present.  I've read several threads on BP on this topic, and I'm still hitting the proverbial "brick wall":  finding a company that will sell me an umbrella policy that will cover all my assets, i.e. my primary residence, vehicles and several small multi-family policies all titled in my personal name.

Here is whom I've called so far (based on recommendations I found on previous threads), to no avail:

AAIC  – NO

Safeco - must write all property insurance/vehicle policies to provide (don't want to do this)

Progressive  – NO

Allstate  – NO

GEICO – NO

USLI - gave me a local agent and "is going to get back to me", but sounded like they wouldn't

I'm sure someone out there has such a policy.  Who is your carrier?

Thanks in advance!

@Jesse Waters

 Thanks for your quick reply.  Also, a corollary to my question for people to ponder would be if I were to raise the rent as a new landlord - should I just raise it (because of the water use) or couch it as a "washer surcharge?"

What would be better received by the inherited tenants?

Hi All,

I'm soon to own a small multi-family property that has W/D hookups in the units, and the current tenants all have their own washers.  The disclosed annual water bill is $2000, which via local custom is paid by the landlord.

In an attempt to curb expenses, my real estate agent suggested that many landlords charge a monthly fee for tenants' washers hooked up to the units.

My question is for those in markets with water billed to the landlord, how do you handle the extra water usage?  Do you charge additional rent in anticipation that the W/D hookups will be used?  Do you have a lease addendum that charges a specific amount for the use of water to wash clothes?  If so, what is the amount?  Is that cost per unit?  Per bedroom?

Trying not to reinvent the wheel. 

Thanks in advance!!

@Marcia Maynard Marcia - thank you for your very detailed and thorough post.

I've done everything but talk to the neighbours on the pre-acquisition side.  Very good advice, and a confirmation of how I was thinking to proceed.

Thank you to everyone who took the time to provide me an opportunity to learn from their experience.

@Michael Noto  Thanks for your quick response!

This property is in a blue-collar/working class/lower income area (C+?).  Nobody is on public assistance.

I don't believe the seller has any dossier on these tenants.  She told me she uses Craigslist to advertise vacancies and "just gets a feel" for the tenants as I understand it.  She's owned the building since 1996 and it's in great shape.

I agree that she would not renew a lease for problem tenants (although her lease is weak in several areas like not prohibitings occupants not on the lease, generous due date - 15th - and minimal late fee - $25).  Tenant A has lived there since 2009; lease expires April 2016.  Tenant B moved in in January of this year - her lease runs through December 2015.