All Forum Posts by: Nicholas Bolcon

Yes paying more taxes means you are making more money.  I would rather make an extra $8k and pay taxes on it than make $0 extra to avoid paying taxes.  You would still be making money just not as much as the pre-tax amount but certainly more than $0.  Consult with tax professionals to minimize how much you pay.

Keep in mind what others on here are saying about the risks and maintenance but don't sweat the taxes.

Thank you everyone for the replies. It turns out the seller agreed to remove the tank. My agent witnessed the removal just a couple of days ago, and the contractor removing it certified there were no leaks. So in this case everything can move forward normally.

It is great though to think of ways to get creative with deal structures in case things don't work out.

I second most folks on here.  Check your lease and laws.  Where I am its typical for the landlord to provide the fridge, if it is indeed old and not having the ice maker is going to cause issues it might be worth it to replace since its likely to fail/cause issues at some point anyway.

That being said I'm not really sure of the obligation to keep the ice-maker working since its a luxury and not necessary for the basic function of the fridge.  That is going to depend on how you want to appear and if you think the tenants will cause a stink about it.  Maybe have a conversation with them about it.

For those reasons and as other's stated above I would remove any fridge water lines before renting or in between tenants.  Having an ice maker is just going to cause issues and it shouldn't impact rent unless you are at the luxury end of rentals.  Same with a garbage disposal.  I have no desire to have a garbage disposal in my own house because I don't feel like fixing it all the time and it doesn't really provide that much convenience.  So I definitely don't want one in my rentals. 

@Jim K. "If you want to manage your properties, manage your properties, if not, pay someone else to do it".  I like that.  My opinion is that the whole reason we as landlords are able to make some money (and its not as much as some people think) is because there are people who are willing to pay rent because they 1) cannot afford a house, 2) don't want to or can't deal with maintenance and upkeep, or a combination of 1) and 2).  Landlords provide that service.  That doesn't make renters a lesser class of people.  They are the customers and we are the sellers.  We are selling a service, and I would prefer to sell a quality service.  If landlords treat tenants with disrespect and arrogance, watch how fast laws start to get ant-landlord.  

I have to agree at least in part with @Account Closed and some others, although not as strongly maybe.  

I am a newbie so maybe I just haven't learned yet but if my tenant had a non-working stove I would be trying to at least get them a reasonable replacement.  Stove won't be delivered for 40 days? find a working one on craigslist or FB Marketplace for $200-$300 for the time being.  It sucks spending that extra money but far better than crediting them back even $50 a day for 40 days.  As a landlord there is an obligation to make sure tenants are living in a clean, safe environment and have use of the space that they are paying for.  I would argue that use of a stove is pretty essential to the space they are paying for, especially if it is included in the lease.  Paying rent is paying for a SERVICE.  I try my best to provide a quality service that people will be willing to keep paying for.  Also you may find that you will keep tenants longer and have them be more willing to pay in a hard time like this.

At the height of the lockdowns in April I had tenants tell me the freezer was on the fritz and ruined a bunch of food they had been stocking up and that they could not afford to replace all of it.  I DID tell them to contact renter's insurance about that and told them that if it had been acting up before (they said it had been) that they need to tell me in a timely manner before it ruins things.  I made it clear I was not liable.  However, I immediately bought a new fridge (it was older than I thought).  The company would not bring it inside and install it because of Covid.  So I drove there, unboxed it, brought it in the house and plugged it in, which is actually more effort than I thought it would be.  I also brought them about $100 worth of frozen food to at least start refilling it.  Did I have to? no.  But did I know if they were having financial hardships? Was it worth it to keep good paying tenants happy? Yes. I have hardly heard from them in months and they rent is always on time.  I'm not trying to pat myself of the back I'm just trying to point out that in my limited experience providing a superior service is going to keep the good tenants longer.  One month's missed rent is a lot more than putting in some reasonable effort to keep tenants happy.  

Of course all of this is a bit harder if its landlording from a distance.

@Lawrence P. Schnapf thank you for the detail.  I appreciate your experience.  I don't think anyone is fear mongering, I think they are just presenting their experiences.  Based on your response I am still leaning towards my current plan of having them uncover the tank and likely take soil samples.  While talking to my attorney in the meantime about what typically happens with lenders and insurers in RI.

While I understand the EPA may not regulate it, and the state of RI does not regulate tanks for residential use under 1,100 gallons, they still do not allow it to be "abandoned" but provide little detail on actual closure requirements.  This means there is a lot up to the insurance and lender discretion and I would prefer to at least have a strategy in mind for the worst-case scenario, which may include walking away of course.

I understand seller financing may not work if the house is the seller's primary asset.  However, I am still just planning potential scenarios and it is not off the table.  The seller does not currently live there so she must be surviving on the rent from the one rented side or other income as well.  In that case not having to pay out of pocket for a tank removal may be appealing while still getting a significant down payment and the full sale amount within a few years.  You are right I would need to figure out if it worked for them as well.

@David M. Thank you for all the info!  Some more background:  I assume the seller owns the house out-right since it was her father's and she is in her 70's... so it seems likely at this point but everything is still hypothetical.  

I was wondering if seller financing could be structured such that there is a credit towards the loan for any cost of removal of the tank by the buyer (me) after closing.  I could take on the cost of removal but be reimbursed for it without the seller paying out of pocket (if they are unable) they would just get less money when I refinance into a traditional mortgage.  

as @John Mocker suggested I think I am going to talk to my real estate attorney about this.  He has quite a bit of experience in buying and selling real estate himself as well so he should have some professional/personal insight.

Also at this stage we are having them uncover the tank to ensure it is still there and at least start assessing the condition.

@John Mocker @Lawrence P. Schnapf Thank you for the insight and info.  At this point it seems likely that there could be issues with insurance or the lender.  While its possible that it might go through I would rather assume the worst-case, especially because I don't want to take on that level of risk.  So the tank will likely have to be properly closed/removed.  

Which is why I am wondering about creative financing if the seller can't afford it. Because if they can't, they will still be stuck until they find a cash buyer who doesn't mind taking on the risk.

No, as I mentioned the lender does not know yet. No need to discuss it with them yet until we have more information. This is still part of inspections.

No, the bank doesn't even know yet. These are just contractors around the area who specialize in this. I called them to get more information to see what it would take to resolve an underground tank being present. Told them I would be pushing it to the seller to resolve but that I wanted to have an idea of what it would take