All Forum Posts by: Shawn Root

He does own a lawn service and runs a crew in the area.  I spoke with my father, who is an attorney, and he believes that I need to honor the 1150 total rent, but can hire who I want to do the lawn.  Maybe it will be this guy, but I'll need to take bids from his company as well as a few others.

Thanks.

As an add-on to my last post.  I understand that current market rent doesn't have anything to do with honoring the existing lease.  My comment about him getting a good deal was really in regards to the 350.00 credit each month in all seasons.

@Darren Sager

Perhaps I wasn't clear enough in my initial post and for that I apologize.

The contract reads something like this:

"Tenant will pay to landlord monthly rent of $800.00, payable in advance on the first day of each month...."

Then continues in a handwritten addition "As additional rent of $350.00, tenant will maintain (mow, edge, blow leaves) at ADDRESS-1 and ADDRESS-2 every week in the summer and as needed in winter."

So, the tenant was paying 800 in cash and trading 350 worth of work for a total of 1150. The property at ADDRESS-1 is the one I bought (and where this tenant lives) and someone else bought ADDRESS-2. 

So, several problems arise as I see it.  There is no defined split for how much the work on each yard is worth.  I don't own the other property and can't continue on with the original arrangement.  Also, 350/month is too much for the size of the yards in question.  This tenant was the previous owner's son and was getting a good deal.  Market rent for this unit should be 1350.

 I did close today.  It's my fault for not getting a good handle on the terms of the lease.  I was more focused on the physical property and making sure that everything was good with it.

So, if you purchase a multi-family property and one of the tenants has been getting a discount (written into the lease) to do yard work for that property as well as another one that the seller owned, how can you continue to honor that in the lease?  He won't be able to fulfill his portion of the terms (that were too generous to begin with) because the other property has been sold to a different buyer.  You obviously don't want to give him a discount for work he's not performing for you.  What do you do?

I've read that we must honor the existing lease, but some of the stuff in the lease just isn't valid any more.  For example, there is info in there about whom to pay.  That is changing, obviously.  How much of the existing lease are you responsible for continuing?

I'm in Texas if that matters.

I don't have any great advice but wanted to share that I have a similar property that I have tried to inquire about. I sent a letter but got no response. Honestly this property has been vacant for ten years and it is such a shame. How did you find the phone number to call?

I went to an "open house" yesterday to see a relatively low priced home in a decent part of town. The home is listed on the MLS and part of the description read

"ALL ROOMS ARE VERY GOOD SIZE. HOUSE IS IN GOOD CONDITION...JUST NEEDS SOME UPDATING ..SOLD AS IS"

When my agent requested more info, they got something like this:

House needs minor leveling. Master bath surround tile needs to be redone. A french drain at the backyard will be a good investment. Showing the house tomorrow at 6pm. This one will not last as we have had lots of interest.

It was being listed for 99.9K and the agent who listed it estimated that it would fetch 125K in good condition.

I hope no one buys that house for the asking price.  They will lose money. The "minor leveling" would probably be an extensive slab repair.  There are diagonal cracks running through some of the sheet-rock.  

The reason that the house was shown "open-house" style is, ostensibly, to minimize the impact to the existing tenants. The tenants, unfortunately, didn't even know that it was going to be happening and were very distraught. They are worried that they have to move out (because the person who took the pics for the MLS listing told them so) but the owner hasn't told them anything. The master bath tile that needs to be redone was a huge hole in the surround that happened four years ago and has been covered with a shower curtain liner ever since. Most likely, there is significant termite damage since the tenant reported that "bugs" ran out when the hole happened. The owner told them that he couldn't fix it because they don't make that tile anymore.

As the agent, who clearly was unfamiliar with the property, walked through it he kept saying things like "as you can see, it's very clean...just needs some minor cosmetic work."  The house was filthy - I mean really filthy - and stank of cigarettes and dog....oh, did I mention the two pit-bulls that prevented a thorough walk-around of the property?

On a rough walk-through, I would guess that (at a minimum) you would need 30K of repairs and likely much more.  

Tree removal (causing foundation and possibly plumbing issues)

Re-sod backyard (big mud pit due to tree and dogs) along with french drain installation.

all new flooring

Full gut of at least one bathroom - probably both

Foundation issues

Myriad smaller repairs (broken doors and door frames, etc.)

That's not minor cosmetic issues.

Sorry, this is probably more of a rant than an actual question, but it is really annoying that the agent was so clearly lying to my face.  Additionally, this landlord was really making the rest of us look bad.  How can you not fix an enormous hole in the shower wall for four years?  I think that the tenants didn't complain because they were paying far below market rent for a property of that size, plus finding a place to rent with those dogs would be a challenge. 

For those of you that have seen my earlier posts, I decided to go the checkbook IRA/LLC route. It has taken a little longer than I thought, but I'm now ready to start looking for deals. I have a friend who is a new Realtor and is sending me things from the MLS, but none of the things he has sent me seem like screaming deals. I've tried to explain what I'm looking for, but I must not be doing a good enough job.

I have also done some driving around and identified several properties that look like they are neglected/abandoned in one of my target areas.  I know that I could start trying to track down owners, etc. to find those deals, but I work full time and though it might be best to work with an experienced wholesaler who already has some motivated sellers.  Does anyone have any good recommendations for wholesalers in the Clear Lake/Friendswood TX area?  If you are a wholesaler and it's frowned upon to answer directly in the forums, please feel free to PM me.  

Alternatively, if working with a wholesaler seems like a terrible idea, I hope you'll let me know that too.

Thanks to all of you who contribute your knowledge and time to this site.  It truly is a wonderful resource.  I think I learn as much from the disagreements between the experienced professionals as I do from the times when they area all singing the same tune.

Shawn

@J Scott 

I guess I have to take ownership of the fact that I'm mixing my terms.  When I saw the OP being accused of being responsible for the shoddy work, I imputed guilt or fault.  I guess I should have read your blog post before responding, but even after reading it I don't quite agree with you or your mentor.  I suppose I could get behind his statement if he was trying to get you to get out of your self-pity and just problem-solve.  It is definitely a good idea to protect yourself as much as possible against others' incompetence or malfeasance.  I just think that there's a big difference between taking ownership of the bad behavior of others and protecting yourself against it.