All Forum Posts by: Bettina F.

Was the PITA tenant aware that her building was being sold?  If she was not, that might explain her reaction.  I would give her the benefit of the doubt -- this time.   Be writing your introduction letter and set a time to properly introduce yourself and your company after closing.  This  would give you a better chance to assess her level of cooperation. 

Is the unoccupied unit in rent- ready shape or will you be doing some remodeling?  We staggered our "re-homing" of inherited tenants so that we only had one remodel going at a time.  You might want to wait to give notice until her leaving fits YOUR schedule.  

The company I use for credit checks was adamant:  The LL is responsible for verifying the identity of the applicant.  They recommend 2 pieces of government issued photo ID be compared to the applicant IN PERSON.  ID theft and "ID borrowing" is rampant in our society.  I have never figured out how LLs with an entire on-line process verify ID.  Your applicant may come back with great credit and no evictions -- but how do know it really IS the applicant if you do not verify ID?

First steps: 1) download your state and local LL/tenant laws, and place in a three ring binder. Learn your state and local laws -- this notebook becomes your bible. 2) Locate and join a local landlord/REI group. Start attending and learn as much as you can. Get name of the local flat fee eviction attorney. 3) start collecting leases -- develop YOUR lease that meets the requirements of your state and local laws, is appropriate for your property, and has the necessary clauses to protect you as a LL within the confines of said laws. 4) develop your screening criteria and methods. How are you going to do credit/ criminal and eviction checks? Does your state and/or county have a free on-line website for looking up the court data base? 5) Develop your marketing plan. It sounds like you are going to rent out a nicer house. Does Craigslist attract higher end tenants in your area, or is it lower end folks? What are your alternatives? (That is where your local REI group is valuable.) 6) Learn QuickBooks, Excel, or what ever means you are going to use to keep your business books, so tax time is not a nightmare. 7) Get LL insurance and an umbrella liability policy. Hope this helps and good luck!

Generally people with substance abuse have "issues" in ALL areas of their lives -- so your neighbor the PM needs to start inspecting and enforcing all the current lease provisions.  Are tenants late on the rent?  -- give notice or evict.  Are apartments not being maintained in a sanitary manner?  Again, give notice, inspect, and evict for non-compliance with lease provisions.   Ditto for unauthorized residents.  We require residents  register their cars with us and monitor the cars in our parking lot -- a good way to watch for unauthorized tenants.

Cleaning up the complex will involve lots of "re-homing" of current tenants, cleaning up and improving the property and renting to new tenants with strict screening criteria in place. 

We purchased a 6 plex 4 years ago.  Some tenants were M2M, some were on leases.   Luckily, we closed mid month.  We sent a letter upon closing to each tenant, introducing our company, with our contact info and address where to send rent.  We also told them we would be meeting with each tenant in the next 2 weeks to go over our company's lease/rental agreement.   Previous owner had not kept good records.  We included language in the introductory letter along the lines of "Records provided by the previous building owner show that you paid a security deposit of $XXX on ____.  Please contact us if this in not correct."  No one contacted us to correct our records,  so that was the number we used going forward.

For tenants on leases, we kept the rental payment and term of lease the same.  We did use our lease which included more stringent rules.  All of the tenants signed.  For tenants on M2M, we included a line in the rental agreement (in bold print) which gave a 60 day notice of rental increase.  All those tenants also signed .

Our building had a lot of deferred maintenance, and we were very busy that first 6 months.  Now it is a very sweet little cash cow.  Mooo!

You mentioned that you were in a multiplex  -- you have to assume that the tenants all know and talk to one another.  This translates into "what you do for one, you do for another".   So, if you are firm now, it will translate into easier management down the road.  We have a 6 plex, and had to be very firm about enforcing on time rent payments.  Once we gave a 30 day notice to a chronic late payer, the whole building  improved in terms of on-time payments. 

Your basic formula is correct.  You are going to have other expenses: maintenance and repair, 5% vacancy rate, possible water/sewer, and any other expenses that you end up paying.

It may be market specific.  Rents are up in my area, despite new building going on due to an influx of population in our market.  And I agree with you that all the building is high end, with accompanying high rents.  We have the pick of tenants for our clean, remodeled 30 year old Class B units and our price point is easily $100 a month less than the new apartments.  I like to drive by the big new complexes at night and see all the unlit units -- by guess is they are running 40% occupancy.   My building is full and highly profitable.

To Chad: I would definitely be free of consumer debt before beginning RE investing.  It will keep you from panicking and making bad decisions,  e.g. renting to someone who doesn't meet criteria because you have bills due.   There used to be a principle in financial management that the length of debt needed to match the life of the  asset the debt is against.  For example, it is OK to take out a mortgage on a house, as the house should last the length of the mortgage.  It is not OK to refinance your house and take out cash to use for a vacation.  The vacation memories will be long gone but the debt will live on.  That being said, it is possible to be debt free (mortgage included) before starting RE investing. 

I own and manage a 6 unit apartment building.  Our accountant recommended Quick Books.  It takes a shift in thinking, because most of the examples given are for a small service business, but once you get your mind around "the tenant is the customer and the unit is the job" it works well.  I have set up income items for rent, late fees, damage charges, laundry income from the coin-ops.  Expenses/vendors are easy to set up.  I purchased the Missing Manual (I am old school and like a resource book when I need help) and the Video Tutor to get me started.  As a reasonably intelligent non- accountant I was able to get set up and running, along with customized invoices, in a week.  I have customized the customer fields to be more LLL specific -- like tracking the names and ages of the tenant's children and the license plates and makes and models of tenant cars.  I use the customer notes feature to track when I issue 3 day notices, etc.  The only time I have to do general ledger double entry bookkeeping is for Security Deposits and Prepaid Rent -- but this is rare and I have the "how to" section marked in the missing manual.  At tax time I download my QB data to a thumb drive, print off end of year P&L and take it to the accountant.  I keep my rental agreements and other LL documents in Word.  I maintain a small paper file on each tenant with my state required forms in the event I ever have to take a tenant to court.