All Forum Posts by: Randy E.

 That was helpful, Varun, but I didn't see the clauses that mentioned a tenant's right to "forfeit"  their rights.  I did see the following: "However, many of the duties you owe each other are controlled by statutory law and cannot be bargained away."

I appreciate that you're trying to help the OP, but I don't want him to go charging into court with misinformation.  NC is a landlord friendly state, but some magistrates can react badly to landlords they think are flouting the law.

 Varun, I might be wrong, but in NC I don't think the tenant can "forfeit" all rights by a simple signature.  For instance, the law against excessive late fees I reference cannot be forfeited by any lease.  It stands, no matter what the landlord wrote in the lease.  I suspect the same will hold true for the 10-day eviction rule.

 If you plan on eviction, please remember that in NC, the late fee cannot legally be enforced if it is more than 5% of the monthly rent.  Depending on the rent for this property, that late fee structure might not hold up in court, especially that $150 kicker.  It doesn't matter whether the tenant signed it or not.  The state of NC deems outrageous late fees to be illegal.  Also, I've been in court and seen the magistrate rule against landlords that tried to enforce such outrageous late fees.  At best, the magistrate will refuse to add the late fee to your judgement; at worst, if you add that $150 fee to the tenants Amount Due, the magistrate might not evict.

Good luck.

 This.

 Thanks for the response, Dan.  It's helpful to get an opinion from the lending side.

There are two partners squeamish about the personal guarantee.  One, as a "matter of principal" because he feels it is wholly unnecessary.  The second, because I think he's ... squeamish in general.

We have supreme faith in the first two sources of repayment, even the two who refuse to sign believe in it.  We may end up proceeding without their signatures if no other loan can be found, but that is sure to make signing partners resent the lack of participation of those who fail to sign.

 You're welcome!

Another tip to keep in mind is that some applicants (Sec8 and non Sec8) are flaky and will not show up for appointments to view the property, or will show up late.  For this reason, I schedule my showings on the same day and in the same time span.  

For instance, I'll schedule Wednesday 11:00-12:30.  I slot each applicant into a 15-minute spot, and hopefully have 4-to-6 applicants lined up.  I'll text them all that morning to remind and ask if they still plan to come.  Some may miss.  Some will be late.  But because I had several scheduled, the morning is not a complete waste of time.

 There are many types of investors on Bigger Pockets.  Many are either veterans with decades of experience, or people with a lot of money looking to invest their excess funds in alternative investments of which RE is one of many.  There are also RE investors who are new or relative new to RE investment who do not have a lot of money; people for whom the decision to invest in RE is a MAJOR life decision with major ramifications riding on whether or not they succeed or fail.

After you hang out in these forums long enough, you'll be able to figure out which poster belongs to which group.  No one is providing bad advice on purpose, but not everyone in each group inherently understands the motivations and situations of people in each of the other groups.  

Not all advice is suitable for all investors.  Some advice is almost universal across groups, but a lot is not.  Remember that and don't be so quick to act upon any piece of advice you read here.  It's important to know from whom the advice is coming from.

-Randy

 Answering the question you asked, I don't think it's "wrong".  I'm not sure if you mean "wrong" to the tenant, "wrong" to you, or "wrong" in a legal sense.

For the tenant, it's not wrong.  If you plan on raising the rent $100/month in $25 increments every 6 months, you're doing the tenants a favor.  If it is made clear upfront that the rent is going to be raised $100 (or $200) regardless, whether in one change, or over 4 changes over 2 years, they should be happy you're taking the gradual route.

For you the landlord, it's not necessarily wrong.  You acquired rentals with tenants already in place, with cash already being generated.  None of us responding know your financial situation, but I'd guess many first-time RE investors aren't sitting on another box full of cash after buying their first investment.  I know I wasn't.  If you want to ensure you preserve the cashflow while you get your finances sturdy, avoiding vacancies and turnover costs is a necessary step.  If these units have been occupied for years, chances are you'll have to pay money to paint, replace flooring/carpet, and other things before new tenants can be installed at market rents.  I think gradual increases, with the occasional tenant moving out at each increase will prevent unnecessary vacancies and allow you to upgrade/turnover the units at a more financially manageable rate for you/a new investor.

Legally, I can't say if it is wrong in your state.  As long as the tenants are month-to-month, it would seem to be okay.  You should definitely check with your state/city laws.

Good luck with your first venture into REI, Richard!

 Hi Judy,

Not every state is as anti-landlord as NJ.  If I owned properties in anti-landlord states, I would be sure to vet the tenants (Sec8 or otherwise) even more stringently.  

Fortunately, in NC and many other states, it does not take "over six months" to get rid of tenants who break a lease.  In NC, I can file, appear in court, and meet the deputy at my property in approximately 6 weeks, sometimes a little quicker, sometimes a little slower.  Not 6 months.

PS - I'll share with you something a Sec8 employee told me after I shared some frustration with her regarding my feeling that Sec8 was not doing what I thought they should do to keep a tenant in check.  She said, "It is up to the landlord to enforce the lease."  I realized she was right.  At the time, I was hoping Sec8 would be my property manager.  I had misjudged their role in the process.  Sec8 is not the landlord, the property manager, or even your friend.  They simply help poor tenants pay their rent.  It is up to the landlord to ensure the tenant is suitable for the property, to check on the property, to enforce the lease, and, if necessary, to penalize the tenant for violations.  Understand that from the beginning and things will go smoother.

Once your tenant violated the terms of your lease, you should have immediately given official notice of lease violation, then taken the proper steps to evict her ASAP.  At that point, either should would have complied, or you could have gotten her out before she inflicted further damage to your property.  You gave her too much power by allowing her to repeatedly break your lease without repercussions.

Good luck with future tenants.

 Thanks for the tips, @Joel Owens.  I'll be sure to keep an eye out for last-minute changes by the lender.