All Forum Posts by: Account Closed

I had it in my lease agreement "That  a tenant shall not park their vehicle(s) on the lawn or any other place on the property not designated as a parking area, or their vehicle will be towed at their expense"  and then saw they had a vehicle parked on the lawn or other area when I did a drive by, I'd take out my bright pink "Parking Violation" Sticker, stick it on the window of the car (under the windshield wiper) letting them know that they had 24 hours to remove the vehicle or the car will be towed.  Then, I'd follow up on that notice 24 hours later and if it wasn't moved, I was ready to move it.  Never had to tow any vehicle in the many years I had been a landlord. I would follow it up with letter to the Tenant stating that any future vehicle violation would be in violation of their lease agreement and subject for Termination of Tenancy. 

Not only do you have to worry about the pipes, but a vehicle is heavy and will damage the yard, will cause deep ruts in the yard, and depreciates the neighborhood.  Plus complaints from the neighbors, and is most likely an ordinance violation where your property is located.

Nancy Neville

If you register your company as a DBA (Doing Business As) you can represent yourself in a court of law.

If you register your company as an LLC you have to have an attorney handle all your cases in a court of law.

However, in this day an age, I would recommend having at least 5 properties as an LLC to protect yourself against lawsuits.

Nancy Neville

My husband and I focused on buying neighborhoods at a time.  We were able to maintain the neighborhood kept it's market value.  Plus, as the above poster stated, much easier to keep an eye on your homes when doing open houses, drive by's etc.,  Yes, most definitely advantageous!

Wesley, here is a blog I wrote on here called the Tenant Phase.  You might enjoy it.

https://www.biggerpockets.com/blogs/4498/blog_post...

Here we go the "Testing Phase".  You're the new guy on the block, tenant is going to test you and is, big time.

Is this tenant on a years lease agreement?  or Month to Month?  

Since this gals been there for 10 years, she thinks this rental property is hers.  Yep, she does.  And you are an intruder.  This is how she paid before.  This is how she lived her life with the old landlord, and therefore you should also go along!

Being in a rental home for 10 years plays a big part in a Judges mind and if the tenant is paying their rent will perhaps give you a tongue lashing if you tried to evict her at this stage of the game.  But that's okay...the law is the law. 

So..this is what you need to do. 

If the tenant is on a month to month, you can send her a Notice of Termination of Tenancy, (a bluff) giving the allotted time per your State Law to move or go to court, reason being failure to pay her rent on time, and a breakdown of the Landlord Tenant Relationship. In Michigan we don't need a reason for a Termination of Tenancy on a Month to Month. If she loves her homes so much, she won't want to move.  She will call you and yell at you and argue with you, but if you remain strong and stick to your decision, she will either comply or go to court or move. 

And you most definitely need to re-write your lease agreement! Have in it that rent will be applied to all outstanding monies owed.  

If the tenant is on a years lease, and she pays the rent and all those extra fees just under the wire, you can't evict her, and she will sooner or later get mad and leave.  (But she will give you a hard time about this.  But believe me, she will eventually move)

If she doesn't pay the rent that is owed, and all the fee's that it entailed, and just tries to pay her rent, DO NOT ACCEPT IT!  These fees are part of her rent now.  Part of the money she owes you now, and therefore, if it isn't paid 100% in full, then file in court for non payment of rent.  Plain and simple!  And then she will have additional court fees tacked on to her already late fee's, rent, etc. 

This is part of "Training Process".  But, from experience, she will most likely move.  Because it's a matter of control now.  They make good money, so that's not issue.  The issue is that she views this home as hers.  She is used to calling the shots.  You are the new guy.  She might mellow, but doesn't sound like it. 

This is tough taking over properties from another landlord.  I know, I've been there and done that.  I had to almost evict everyone that I took over.  I had to re-write the lease agreement, and tried to come across as fair and balanced, a good listener, a good landlord, but that I a contract was a contract and rent was my income and evictions would take place per the lease agreement.  It took a good year, but then our tenants stayed with us for many many years thereafter.  You just got to keep strong, and hold your ground, no matter how tough it may be.  But it wont' be forever!

So that is my advice to you.

Nancy Neville

Hello Clarence:

I'm glad to see you ask this question.  Every State but six must have either a Broker's License or a License to be a Property Management Company. (See Property Management Requirements by State by googling this)  And this is because, most property managers have never been a landlord before, or have only owned one property or two.  How can someone take care of your property, handle tenants, if they don't have a clue of what it entails.  All the good, the bad, and the ugly!

I've read a lot of so called PM Lease Agreements and they all protect the tenant more times than the Landlord.  I'm absolutely flabbergasted by this!

A Property Manager represents YOU.  They are to be fair and balanced, but should never make deals with a tenant when a  tenant can't pay rent, or is falling on hard times, if it involves hurting  you, the Investor. 

Another thing I find absolutely "crazy" about Property Managers is that they have not developed a good Contract between them and the Landlord.  It's too "wishy washy".  And that's because they don't know what's involved 100% in handle Tenants, or City Ordinances, or State Laws.  

A Property Mangers contract  should have everything listed in great detail about their services that they provide.

Example:

• Will stage the rental property for showing
• Will advertise the rental property 
• Will take calls regarding the rental property
• Will schedule showings for the rental property
• Will prepare the Rental Application
• Will Screen the applicants
• Will choose the renter
• Will prepare the Lease Agreement according To State Law and to be fair and balanced.
• The Lease Agreement will entail what the tenants can do and not, when rent is due, what happens when rent is late, etc.
• Will hire a lawyer to handle the court evictions (You will be charged for)
• And of course do the repairs on the properties when needed, (which you will pay for first or be billed for) but will call the landlord if the repairs go over a certain amount.  If it does, then the PM will most likely ask the Landlord to deposit some money into the Escrow Account in order to take care of those repairs.  Some PM's will ask for some money at the beginning to deposit into an Escrow account in case they find themselves in this situation.
• Will send you Monthly reports regarding Rents Received, Expenses, and a breakdown of what transpired with your rentals for that month.  (List of vacancy, evictions, problems etc.)  e.g., Profit and Loss by Class Report!
• They will have their price list for all the services provided to you above.  (Some will charge 10% commission on each rental home collected, some may charge 15%, depends on the going rate today.  Some will charge the first months rent for renting out vacancies, etc.)
• You most likely will be charged a setup fee for setting up your properties in their software program.
• They should send you the Reports (spoken of above) along with the money you made for the month, less any money owed to them.  

Mistakes I see PM's make.

The mistake I see PM's make is that they allow the Landlord to dictate to them how they want this or that.  And that's a big no no!!!    Things like, what colors to paint the rental property.  Or how to pay them their profits and when.  And if the landlord has partners, they want the PM to pay them percentages, etc, and it makes everything Chaotic.  

The Landlord hires a Property Management Company, because they either don't have time to mange their properties themselves.  Or they don't have a clue as to the Laws of how to be a Landlord.  Or they don't want to deal with the hassle of dealing with tenants and all that being a landlord involves.  Therefore, landlords need to let the PM's do their job!!!! But...the landlord better make sure they have a reliable, trustworthy, already a good name for themselves, before handing over their hard earned investments to them.  

Another thing PM's do wrong is that they do not setup their own Property Management Business as a separate company from the Landlord's Rental Business.  They don't want to use two different company files in QuickBooks.  They want it all in one!  But that's not legal!

A Property Management Company keeps track of their own personal business income and expenses.  Then they bill the Landlord for their services.  Therefore, the Landlord is their Customer..their client.

The Landlord's company file, keeps track of the LANDLORD's income and expenses, Therefore, the  Property Manager becomes the Landlords Vendor.  This is why I suggest that all Owners should have their own company file in QuickBooks.  

However, everyone likes to cut corners these days!  So...whenever I say this to people, they come back and say, "It's not feasible for me to have a separate company file for each owner.  What if I have 200 owners and they have 50 properties each that I take care of..... and I say that if they have 200 owners then they absolutely should have their own individual company files!  Would you rather take a chance on combining all your owners into one company file, and hoping you choose the right owner out of all 200 owners, when you have to enter in crucial payments from the Tenants or Security Deposits or progress notes?  And hope you chose the right Owner.  What if the Owners have similar names.  To me that's not good business.  It only takes a click of a button in QuickBooks to pull up another company file.  You as a Landlord deserve to have your own company file, with just your own money in it, and your own tenants in it, and your own incomes and expenses in it!  But man will disagree with this paragraph because they some how find it too consuming to setup QuickBooks with each owner having a separate company file.  Yet they will have to set that owner up and all their properties anyway, whether it is in one company file, or their own company file.  Oh well!

Brokers who are Property Manager's I find don't make good Property Managers because they are also involved in buying and selling.  Most Brokers and their agents are not landlords.   If you can find a Broker who is also a landlord then I say that's the one to choose.  And read the contract closely.  It shouldn't just be a one page Rental Lease Agreement or three pages.  If that's how big the lease agreement is, you aren't protected!

Nancy Neville

For those of you who have been trying to contact me, my husband had a heart attack and  therefore, I have been "retired" for a few months (didn't feel like doing too much).  However, I've found out that life has meaning and should go on, it helps to make the bad not so bad.

Nancy Neville

I use QuickBooks for me. My CPA never touches my QuickBooks. He doesn't alter it, or see it. He only see's the reports I generate from QuickBooks at the end of the year.

QuickBooks is an accounting software program for me. Now if I were to use it to file my own taxes that would be a different story. Whatever he does on his side of the fence, I don't care. I only care to see what houses are making me money and what houses aren't.

Hello Larry, let me see if I can help a little.

If you don't have a CPA or an Accountant, then you really have to know how to setup everything according to the law, financial law, accounting reporting, etc.

For landlords we use a Schedule E. For Corporations we use a Schedule C, etc. That's pretty simple to do in QuickBooks, but you can't merge a Schedule E with a Schedule C.

Since most of you young whipper snappers are into everything regarding Real Estate, it makes your life pretty tough when it comes to keeping track of all the stuff you do, but I think I can help you.

Most Landlords, Investors, have CPA's and Accountants doing their taxes at the end of the year. Therefore, we, as investors and landlords, don't want to have to worry about how to setup our data into QuickBooks as though we were Accountants. We just want to see how much money our investments are making us and whether a proprety is making us money or causing us grief, and at the same time have our Reports be user friendly for our Accountants when it's time to turn over that data at the end of the year for our taxes. And we can do that in QuickBooks. In order to do that we first we need to setup our properties as a class.

*Setup all your Rentals that you own as a class: Call this class Rentals

*Setup all the homes your purchased and want to Flip as a class: Call them Homes Purchased

*Setup all the homes you sold: Call them Homes Sold.

Then list all your properties individually as a sub class of each Building.

Class

Rental

17394 Evergreen

8252 Wisconsin Street Apartments

Unit 1

Unit 2

Unit 3

Unit 4

18632 Braile Stree

Flippers/Purchased Homes

2456 Hartwell

1920 Asbury Park

Sold Homes

12345 Happy Dance Lane

6789 Money Drive

You see my point!

Foot Note:

(I never use the COGS theory because I always had a CPA doing my taxes at the end of the year). All I cared about was how much money the property had cost me, how much I spent to fix it up, and how much I made when I sold it)

By listing each property individually as a class and each unit individually per building if you have a mutli-dwelling, you are able to print our reports showing you the income per building and/or unit less expenses, per building and/or unit, giving you your bottom line, per building/per unit.

The Report that will give you this running total is called a Profit and Loss Report by CLASS!

This report is your very best friend.

You want to know exactly how much money you spent on repairs for that building, and each unit inside the building, because tenants do damage to their units and by showing expenses per units, will be evidence proving that you did indeed take care of that repair that the Tenant is telling the courts that you didn't take care of.

You want to see how much money you spend solely on a building, like a roof repair, verses how much money you spent on tenant damages, that they did themselves to the building or the unit. Evidence...Evidence...Evidence. And also you need to know what homes are making you money and what homes you should sell.

I never setup my flippers as COGS. We are landlords and investors and we don't have Inventory. I don't consider my flippers to be Inventory. COGS is always an Income Account. Therefore I want all my expenses pertaining to that property to show up as expense accounts and not as a negative income account.

Once again since I have a CPA handle my taxes, I just want a good reporting system that tells me what I need to know and at the end of the year give my CPA all the things he needs to know.

So I hope this helps and I wish you well in all your endeavors!

Nancy Neville

The desktop version has all the bells and whistles. Online versions are limited.

Online versions are handy if you are on the road and need to access your data via your cell phone or laptop. But as I said it is limited.

My book does not cover online, however, many online users have used my book, as the book covers what you need to know to setup your company, but it may have more advanced setups in my book than what you see on your online version.

Nancy Neville