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All Forum Posts by: Ralph S.

Ralph S. has started 12 posts and replied 536 times.

Post: Sometimes, You Feel Like a Jerk

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

I rarely start a thread, but today I had an experience that I just have to share.

A year ago, I thought I'd hit the jackpot. A single mom with two teenagers (15 &16) moved into one of my rentals. She had two other, older sons that didn't live with her, one in graduate school. When they came for the showing, she had her sons take off their shoes when they entered the house. I liked that. In the beginning, there was a lot I liked about having her as a tenant.
Rent to income ratio was a great 30%, moving from a 10 year stay in an apartment that was "converting" to Section 8 to raise rents. 4 years in the same job, more years in the same field. A couple small claims actions 7-8 years ago (no evictions) that had been satisfied. Everything checked out. Thought I'd have a great tenant for years. That was a year ago.

After a couple months, one of her sons, and 5 of his pot smoking buddies are caught, having broken into my vacant house next door, getting high. The two adults are hauled off to jail (one on parole, had it revoked, and the other was wanted on another charge), and I end up at the PD to sign the complaint. Turns out Jr has had numerous run ins with the law, and was "on their radar." All were charged with Criminal Trespass, and the two adults with possession of THC.
The next day, I was at the vacant house and three of the four minors Mothers asked to meet with me. It went well and I agreed to let the boys work it off. There was a small list of damages. Cost me about $100, and for two weekends, they did what they could, which wasn't really much. One had some practical experience, lived on a farm, but the other three knew little more than which end of the hammer to hold on to. I began to think of the three as the lost boys.
After working off their debt, the lost boys asked if they could help me finish renovating the vacant home (for some money, of course). I was doing the clean up and renovating myself, on weekends. I agreed. For the next 8 weekends or so, they helped, and I taught. Watching to make sure they didn't hurt themselves was about as much as I could do, and cutting through the power cord of my circular saw was exciting but nobody was hurt. And, gutting and finishing a bathroom was the high point. I paid them something each weekend for their work.
You hear the term, disadvantaged youth, but I hadn't really ever seen it up close before. No Dads in their lives, not doing well in school, no interests, no skills, little or no money, no direction, living only for the moment. They enjoyed learning about the tools, though, and arguing about who would cut next, or who holds the drywall and who gets to use the cordless drill. Work went slow, but I looked forward to it more than if I was working alone.
As the months passed, rent became later and later. Every excuse in the book, even the "rents in the mail." The best one, however, was "the bank took my money." Seems she had a "second chance" LOC at a credit union, for those hoping to restore credit. She didn't make a few payments and when her direct depo hit, they took it.
In Nov, after spending a day working on the vacant, I got a call saying they had no hot water. I returned to find the pilot out, but it lit, I tested it, turning it off and on. Relighting. Watching it. When I left, told them I couldn't find anything wrong, it was working and if they had any further problems, to call me. This was about the 10th of the month, she hadn't yet paid the rent.
The next night, Monday night, I get a call. Water's out again. I go over, it starts, I go through it all again. Can't find anything wrong with it. I've changed many thermocouples and gas valves over the years, on water heaters and in furnaces. Hot water heaters are no mystery. They work or they don't. This one was working. You can guess what I was thinking, Professional Tenant!. It was a 4 year old water heater and the rent hadn't been paid.
Friday, her payday and no call. I call about 8pm and am greeted with a drama queens rant about being out of hot water all week, she and her kids are sick from bathing in cold water, and she's had a plumber out there for three hours that day and he couldn't fix it. Said he'd be back on Monday. I said I'd be there in the next morning. I called the plumbing company and asked their answering service to get someone to call me asap. The next morning I found the valve and burner taken out, and an old style "universal" thermocouple had been installed. It didn't fit right in the newer water heater (smaller pilot light), and after putting everything back together, the pilot would not stay lit. I went and got the right thermocouple, and a new valve and installed them. Just as I was finishing, a plumber arrived to see what was up. He played dumb as to who did what, saying only that his boss had asked him to stop by and find out what was going on. They never did return my calls or bill me. That was Saturday.
On Monday, I get a letter from the City. On the prior Monday, between my first and second trips for the hot water heater, she had called the city and complained. The city code inspector had come out on that day and inspected the house. Professional Tenant status confirmed. There were 4 "violations." No smoke detector in the basement, hot water heater, stove wouldn't light, and the stairs to the basement needed repair.
A little background. I know the inspector. Have dealt with her on more than a few occasions, and have never had any problems with her (or, her with me). That house, in 2006, was the house I did a full gut on. New 200A electrical service, complete rewire, new plumbing, new hot water heater, insulation, drywall, windows, doors, the works. $40K. All permitted and inspected by the city. I was told NOT to do anything with the basement stairs. They were solid, but ugly. And, I mean Butt ugly. The reason they wouldn't let me replace them was that there was no way to meet today's rise, run and width code for stairs, so no new stairs.
So, I call an appliance repair company. $100 service call. He shows up. Nothing wrong. Stove works fine. He adjusts the thermostat. I get the bill, pay it, and bill the tenant.
I show the inspector the bill, which shows what the repairman’s comments were. She apologizes, says she doesn't have a gas stove and doesn't know anything about them, but thought it took too long to light.
I show the inspector the smoke in the basement, and mention it was right where it was 4 years ago when it passed inspection. A little jab, I guess. She tests the hot water. Then we discuss the stairs, and I say she's telling me I have to do what I already know the city won't let me do. She goes back to city hall to talk to the real building inspectors (she's just the code violation inspector). They say no permit. Work it out. We meet again and she wants’ me to put a 2X4 here, another there, level that step. I say, why don't you just let me replace it? She reluctantly agrees. I replace it in a weekend, She inspects, done. To be honest, I'm proud as a peacock that those four, basically bogus violations was all she could come up with in my 100 year old house.
I've about had it. I can put up with Kids-Will-Be-Kids (not the first time I've had a vacant unit broken into for a party), the whole water heater/city episode was a bother, but, hey, got my stairs, but the rent is the rent. Despite her good rent ratio, she just couldn't afford this house and continuing on this way just wasn't going to happen.
As the kids moved through the juvenile court system, I would get a form letter on victims rights, a form for damages, and a call from the case worker to discuss each case as it came up. They would suggest an outcome and ask for my thoughts or if I had any objections. Each time was pretty much the same. The first three had no record, and the recommendation was community service, and I agreed. But my tenants son hadn't come up until recently. I got the form letter, but no call.
In May, when the rent was late, I served a 14 day notice to terminate. Her last day in the house was May 22nd. I drove by and was surprised to see her actually moving. I was sure I was going to have to evict. I asked when I should come back for the inspection and returned at that time. They were still cleaning. Cleaning. I was shocked. The only items noted on the move out checklist was a broken rail on a kitchen cabinet drawer, and a dirty carpet. They couldn't get a couple large items out of the basement and I agreed to meet them today so they could get them out.

Finally, today. I replace the rail on the cabinet drawer and she comes to get the last items out of the basement.

As a potential tenant arrives for a showing, she tells them how nice it was to live there. She apologizes for not getting the items out last week. She's crying.

I had heard that she had moved her stuff into storage and was staying with family. What I didn't know is that yesterday she and her son had gone to court, and she told the court that no, she didn't have a permanent residence right now, and she just couldn't control her son anymore and didn't know what else she could do. They took him into custody and sent him to a youth detention center until he turns 18.

I've evicted my share of tenants over the years. Never felt sorry for any of them, either. Have always advocated separation between landlord and tenant. Don't get involved, friendly but not friends, keep it business, stick to the lease, do your part and don't let tenant dramas pull you in.

But tonight, I just feel like a jerk.

Post: Setting up a management company for your own rentals

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

You don't need a license to manage your own properties and you don't need another legal entity. If your LLC's have multiple shareholders, then you are likely already required to be licensed, regardless of number of LLC's.
The legal structure is simply risk management tied to the tax scheme of things. Bottom line, they are all yours and the checkbook the checks are written from is meaningless, as long as you've accounted for things accordingly. You could even write the check from your personal checkbook, credit contributed capital and debit the expense in each LLC if you like.
In your example, as long as you've got the required support (billing), nobody's going to care how that expense gets allocated through the LLC's come tax time.

While, I too, can proudly declare I'm not a Lawyer, or a CPA, I do work in large companies, and have done cash accounting and inter-company accounting with boatloads of legal entities in multiple countries, holding companies and the like. And they all shared one thing in common: One checkbook (well, per country, anyway, which is really to say, per currency).

Your solution lies with your accountant.

Post: Buying a house with my girlfriend

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

Q: What does the owner of a property call a person, not an owner, who lives in the property?
A: A tenant.

Tenants have no claim of ownership. So, put it in writing right after talking with that lawyer.

Post: Buying a house with my girlfriend

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

Not a lawyer, and this is probably not the best idea, but get her to sign a MTM rental agreement. Make her your tenant. Set the rent, utilities split, file a schedule E, take the depreciation deduction, etc.

If it doesn't succeed in the "break up with her" part, it should provide the evidence that ownership was not part of the deal.

Like I said, not a lawyer, not legal advice, and you need the real thing.

Post: Mud dauber wasp

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

And check for their mud supply. They can't fly far from the source. If you can limit their supply, your spring-time problem may, uh, dry up.

Post: I need your VOTE, NOW!

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

Let's make it a runaway, BP Nation!

Post: what is wrong with the property?

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

It's not listed with a realtor, so doubtful it's a short sale. The trulia listing number and a search by address show no listings found.

Post: They aren't moving in???

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355
Originally posted by Bienes Raices:
Originally posted by Ralph S.:
While certainly not enough info to draw any hard conclusions, see the red flag for what is is worth at this point.
If they don't answer or respond to their cell phones, meet agreed upon schedule for assuming utilities, signing the lease and moving in, are they displaying the characteristics of tenant you would really want? :roll:

I agree, but I've gotten so far into this with them that I can't get out at this point. They are moving in tomorrow. Hopefully this incident was a fluke.

And they are now convinced you are a despirate landlord willing to accept less than what was agreed to. You have shown them that any agreement is arbitrary (sp?). The tenant/landlord relationship has been firmly established even before they move in.

If they don't respect you before they move in, don't expect them to after they are in. But, you can hope for the best.

Good Luck.

Post: Tenants rent payment is late and then we get a "Letter"!

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

A classic "beginning of the end." Can't pay the rent so she needs to try and make it ok.
If you've served the pay or quit, and she hasn't paid, start the eviction. Better sooner than later.

Post: They aren't moving in???

Ralph S.Posted
  • Real Estate Investor
  • Sacramento, CA
  • Posts 566
  • Votes 355

While certainly not enough info to draw any hard conclusions, see the red flag for what is is worth at this point.
If they don't answer or respond to their cell phones, meet agreed upon schedule for assuming utilities, signing the lease and moving in, are they displaying the characteristics of tenant you would really want? :roll: