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All Forum Posts by: Account Closed

Account Closed has started 30 posts and replied 853 times.

Post: 1031 flips? and business structure

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

The rental Industry uses Schedule E.  

You get into C Corporations or S Corporations or even an LLC, and you pay big bucks in taxes, not to mention Attorney Fees.

If you are an C or S Corp, you can bet the eyes of the IRS will be watching you like a hawk.  And that is why you will need to have top notch attorneys to keep you out of trouble.

LLC's are for actually Landlords who are worth over a million dollars, maybe even more.

I don't know if this helps, but there it is. 

Post: Forming LLC to govern the rest of LLCs

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

A P&L is a Profit and Loss Report that gives you what your Income is, less expenses totaling your bottom line.

When you have an LLC you need to set up that company as an individual company in QuickBooks.

Usually landlords don't carry an LLC and if they do, they perhaps put 5 properties per LLC. It is a suing society and since you are a CPA, I understand your concern, because they can go after everything you own personally, if you don't have an LLC.

However, to help you out some, you can setup QuickBooks this way, so that you don't have a ton of bank accounts.  

Setup your properties as a class.  If you are a  property manager you can setup your owners first and list their rental units as a subclass.  If you are a landlord just setup all your rental properties as a class.

This way when you receive rent you can apply that payment to the correct property by clicking on the class field in your forms that you fill out.  

You can apply that expense to that particular property, and if it's an apartment building you can apply it to the unit or the building itself. 

When you do a Profit and Loss Report by Class, you are given a detailed accounting of how much money each rental home or rental unit has made you. 

If you have an expense, it will tell how much it cost you to fix the building, or a particular unit inside the building. 

Classes are landlord's best friend.

Nancy Neville

Post: Landlord References

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

The landlord is probably angry that they are moving out and it's fall.  Winter soon upon us.  (Snow schedule here in my city on Saturday)  :(  

If the tenant wasn't good, I would think the landlord may have said something in some way about the tenant.  But maybe the landlord is taken off guard and doesn't know what to say at the moment.  

Most landlords, and this is my pet peeve, will lie about their tenants, just to get them out of the rental house.  So I never check with landlords anyway.  I go strictly by the Credit Report.  It tells me everything about them that I want to know.  How many evictions they have, who they owe, and where they work.  

Pay check receipts is good and so is a copy of their taxes they filed last year. Not all their personal tax information, but earning reported to the IRS.

Nancy Neville

Post: When to Accept/Reject a Tenant with a History of Collection Judgements

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

If the husband qualifies, as you say he does, and he makes three times the amount of the rent, then I would accept him.  You always want to rent to tenant(s) that are Collectible.  Or get a Co-signer.  However, if this guy makes at least 3 times the amount of rent, then I'd go for him.

Post: Accept or deny?

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

Nope!  Next please!

Post: Eviction without sheriff GA?

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

HE EMOTIONAL ASPECTS OF DOING AN EVICTION by Nancy Neville

I feel very strongly about the eviction process and how it is handled. Because, if you handle the eviction process incorrectly and do it your own way, or take matters into your own hands, it could mean, a law suit against you. It could mean jail time. Or, it could mean having your case dismissed. Whenever we are involved in an eviction, emotions run high and it’s a very sad and dangerous time.

When we are new in this business we have a tendency to make a lot of mistakes and that’s only natural. After all, that’s how we learn…. is by our mistakes. But the biggest mistake that I see new landlords make, as well as seasoned landlords, is their reluctance to file for eviction (that Notice to Quit for Non Payment of Rent) IMMEDIATELY and on the very first day rent is late.

When I ask them why that is they tell me that they feel it is unreasonable. They say that it’s not right. They say that it’s not fair. They say that they would feel embarrassed to send out a Notice to Quit the very first day rent is late. They say they can’t do it, won’t do it. And if they did do it, they would feel guilty. So my mission today is to take away that guilt.

Choosing the right Tenant can be very crucial as to how many evictions we may possible encounter. The better the Tenant, the less evictions we may possibly have, so it’s very important that we screen our applicants more thoroughly than we have ever screened them before.

As I’ve said earlier, for me the screening process begins the moment that an applicant walks through the doorway of my open house, because I take note of how they act, of what they say, of the questions they ask me, of their mannerisms and how their children behave. And after all the applicants have filled out an application, I take the applications home with me and I do a more thorough investigation.

I do a credit check to see how they pay their bills. If they pay their bills well, chances are they will pay me well.

The next thing I do is I verify their employment. If they have been at their job at least a year or more, it tells me that they are stable and COLLECTIBLE! They must be COLLECTIBLE! If they are collectible you can sue them, garnish their wages, tax refunds or place a lien on their properties. It is the most important thing to check for… so make sure they are COLLECTIBLE!

Not only choosing the right tenant for your home is important in how many evictions you may possibly encounter, but having a good landlord/tenant relationship helps as well. Because if a Tenant likes you and your property, chances are they’re going to do everything they can to stay. From paying their rent on time, to putting you first when it comes to paying their bills. And I believe that good landlord/tenant relationship begins at the Open House as well. Because when the tenant applies for your home, they are actually saying that they like you and your house. When you pick that Tenant for your home, you are saying you like that Tenant and that family and so far a good landlord/tenant relationship has begun and that is good.

At the signing of the lease we get to know each other better.

Allowing tenants to pay their rent anytime only hurts the landlord. We must remember that we cannot even begin the eviction process unless that NOTICE TO QUIT has been sent. When you allow your tenants to pay their rent anytime during a rental month you are allowing your tenant to rewrite the lease agreement and that could cause your case to be dismissed.

It is very important when we set forth rules and regulations and rental due dates that we live by those rules. It’s not only beneficial to us but it also gives the Tenant some stability by knowing exactly when their rent is due and what will happen if it’s not received.

Time is of the essence! Time means money!

When we prepare our tenants to receive that Notice to Quit on the very first day rent is late, there shouldn’t be any reason to feel guilty about it or not to do it. IT’S JUST A NOTICE!

Going through the eviction process affects us in many ways.

Not only are we disappointed because the Tenant didn’t work out, but we’re pretty worried now to boot.

Not only are we worried, but we’re pretty angry because it took a lot of work to get our rental units into shape again. It took a lot of time and money and we have a lot invested in our property.

We’re worried now about having to go to court. We’re worried now about our financial status, because we still have to pay our mortgage and taxes and our own bills. We’re worried about damages they may do to our place because of retaliation. We’re worried about being sued. What if we say or do something wrong? And by the time it is all over with, and the eviction process is long, we are absolutely exhausted! And yet, we worry about sending out that notice to quit on the very first day rent is late! Unbelievable!

Some landlords don’t have a written rental or lease agreement. If it is not in writing the Lease is automatically a Month to Month Rental Agreement. When we evict someone we are actually evicting not just a tenant but anyone who is in POSSESSION of the house.

I’m sure most of you have seen the movie Pacific Heights. Michael Keaton didn’t sign a lease. He took possession of the apartment without the landlord’s permission, yet the Landlord had to evict him just as though he were a normal tenant.

If a bum off the street broke into your house and took possession of your home, you would have to evict them just like anyone else.

It is very important to remember that a Notice to Quit is exactly that, A NOTICE. It is a notice notifying your tenant of an action that may be taken against them if they don’t comply with this or that. Remember we cannot begin the eviction process until that notice has been sent.

Because an eviction is a legal process to evict everyone who is in POSSESSION of the home, we need to list the names of everyone who resides in the home. But most times, we don’t know everyone’s who is living in the home let alone their names, so what do we do?

In my state I am allowed to add the words ALL OCCUPANTS. By adding the words ALL OCCUPANTS to all my legal papers, it assures me that I am evicting everyone who is in possession of my home, including the dog!

The final stage of the Eviction Process means removing the tenant physically from the premises and this is truly a very sad and dangerous time.

From the moment you turn that Notice to Quit over to the court house and file the Summons and Complaint, you NEVER EVER want to enter the rental unit or confront the tenant verbally or physically.

The only way I communicate with my Tenant from this point forward (if I have to at all) is in writing! If you do otherwise, and enter the premises and you see damages, or don’t like what they have to say to you, and you take matters into your own hands, and try to do things your way, it could mean a law suit against you, jail time, or having your case dismissed. This is a very dangerous time. EMOTIONS RUN HIGH and this is why a court appointed official called a Bailiff will go out to the home and remove the tenant from the premises and Not YOU!

We must remember that being a Landlord is a business. It is a business of fixing up homes and renting them out and fixing them up again and again and again. It is a business of evictions, of lawsuits and court scenes and injustices. If we can accept and expect all of these things then we will be successful. But if we can’t, then we will fail.

Remember…being a Landlord is not for everyone. If it was, everyone would be doing it.

Post: Questions from a Newbie, taking over property with existing renters

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

It's always tough being the "New Owner", as you will be tested.  You will hear them say, "Well my other landlord never said I couldn't do this or do that.  My other landlord let me pay late".  And it will be tough for you to be patient with them, yet you kneed to be  firm by adhering to the lease agreement.  It will take time to win their confidence.  And if they are good people they will stay.  If they are controlling tenants, they will eventually leave.

A landlord, new or seasoned, should never be wishy washy.  It confuses tenants.  Without rules and rules that are  implemented comes Chaos.  When your tenants know what to expect they feel secure.  They may not like it, but they know the score, and they feel comfortable. 

Winter is coming, so I wouldn't say anything about putting in meters yet.  Let them get to know you, and then send out a letter to them stating you are thinking of installing electrical meters on the home, which could benefit them in the long run.  At least they would know how much electricity or Gas they used, and may end up saving them money.  

I had apartments and duplexes that shared Utilities and we had to divide it, and there was always a problem.  5 people in one apartment, and 3 in the other, and as much as you try to do the math, those 3 people may use in actuality more than the 5 people in the other apartment.

Utilities are based on how you use the utilities.  Is your thermostat on 90 and someone  else has it set for 68?  Do you take a shower three times a day, or a bath once a day?  I mean, one person could really use more than 5 people by their habits.  

So I would say that installing meters is a good idea, but wait until spring.  Winter is not a time to make waves at the moment.  

Nancy Neville

Post: Should the security deposit cover pet deposit?

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

Usually anything called a deposit falls into the category of a Security Deposit.  In Michigan we can charge one and  a half months rent as a Security Deposit.  Therefore if my rent was $600 a month I could charge $900 Security Deposit and first months rent.  

Let's say I wanted to charge a $250 Pet DEPOSIT.  That $250 would have to be part of the Security Deposit, worded the way it is.  Pet DEPOSIT.  So I would be out $250 if the pet did some damages.  Whereas, a normal tenant giving me the same deposit of $900, the full amount would go toward damages and money owed by the tenant.  

In Michigan, you can charge a Security Deposit  of $600 and a Pet FEE of $250 that will not be part of the Security Deposit because it's called a FEE and not a Deposit.  

You can have your contract say, a non-refundable Pet Fee, or a refundable Pet Fee providing there are no damages by the pet.  (Make sure it is in your lease agreement contract)

The same thing for  carpet cleaning fees.  We charged a non-refundable carpet cleaning fee of $150.  (To cover cleaning the carpets, the appliances, etc, after a tenant moved.)  

Generally when Landlords collect a Security Deposit, it is never enough money to cover the expenses that we face, after a tenant leaves, because the courts deem a lot of it as normal wear and tear.   (It depends on the Judge you have).  

So in Michigan you can charge $900 Security Deposit + $600 first months rent, + $150.00 Pet fee + $150 non-refundable carpet cleaning fee. 

If my tenants left my places squeaky clean, I returned it to them, even though it may say non-refundable.  But, sigh, that didn't happen very often.  

Nancy Neville

Post: How long do you keep your rental records?

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

Records to Keep and How Long

Two Years:

Bank Reconciliation Reports

Deposit Slips

Correspondence with customers and vendors

Three Years:

Bank Statements

Employment Applications or Tenant Applications

Petty Cash Vouchers

Sales Commission Reports

Ten Years:

Accident Reports/Claims

Canceled Checks

Chart of Accounts

Contracts, Mortgages, Notes and Lease Agreements Expired

Garnishments

Inventories of Products, Materials and Supplies

Invoices

Loan Statements and Schedules

Payroll Records and Summaries

Purchase Orders

Time Books/Cards

Vouchers for payments to vendors, employees, etc., includes allowances and reimbursement of employees and owners for travel and entertainment

Withholding Tax Statements

Permanently

Audit Reports

Cash Books

Canceled checks for important payments like taxes, purchases of property, special contracts, etc., and should be filed with the papers pertaining to the underlying transaction.

Contracts, notes and Lease Agreements still in effect

Deeds, Mortgages and bill of Sale

Depreciation Schedules

General, Private Ledgers, Year End Trial Balance

Insurance Records, Current Accident Reports, Claims Policies, Etc.

Journals

Legal Correspondence

Patents and related papers

Property Appraisals by Outside appraisers

Property Records, including costs, depreciation reserves, year-end trial balances, depreciation schedules, blueprints and plans

Retirement and pension records

Tax returns and worksheets, revenue reports, and other documents relating to determination of income tax liability.

Trademark registrations and copyrights

Year-End Financial Statements

Post: Putting security bars/doors on a rental in a rougher area?

Account ClosedPosted
  • Retired Landlord/Author
  • Commerce Township, MI
  • Posts 1,252
  • Votes 1,038

You can buy security bars that latch from inside the home.  They are on hinges and are like a swinging gate.