All Forum Posts by: Kyle J.

@Thomas Moran  The funds don't have to be sourced to your W2.  Here are the eligibility requirements:

Fannie Mae: What are the requirements for a delayed financing exception?

As you can see, the funds can even come from a loan (e.g. personal loan, HELOC on another property, etc). There just can't be "mortgage financing" used to obtain the subject property. Which kind of puts your buddy in a precarious position, as he'd either have to do an unsecured loan or secure it via some other property/collateral.

@Mikel Kaubfa You can’t prevent them from leaving and breaking the lease. (That’s why longer leases like the 2-year one you signed with them are usually not advised by experienced landlords. They tend to benefit the tenant more than the landlord.)

You do not have to let them find a new tenant for you though.  You’re the landlord and it’s your property. That’s your job. Not the tenant’s. They have no incentive to find a good tenant for you (they likely don’t even know what a good tenant is).

Once your current tenant moves out, get the property rent-ready and start marketing for a new tenant as quickly as possible.

Your current tenant is legally responsible for the rent until you find a new tenant and that tenant begins paying rent. However, you have an obligation to make a reasonable effort to find that next tenant and mitigate your losses.

You don’t have to accept the first person that applies. You can apply your same/normal screening criteria and wait until you find an applicant that meets them. Once you do, and that next person begins paying rent, your previous tenant is off the hook (meaning you can’t collect double rent from both of them). 

Lastly, don’t forget to send your current tenant an itemized statement for any deductions you make from their security deposit within the required 21 days (or you’ll lose your right to make any deductions). You can read more about that here in case you have any questions:

California Landlord-Tenant Handbook

Hope that helps. Good luck. 

@Ajeng (AJ) S.  Something to be aware of when you're using a hard money lender...you're not really buying "all cash".  You're using financing (similar to a bank).  It may be quicker than a traditional bank, but a hard money lender is still a LENDER and it's still financing.  

Why is that important? Because, if delayed financing is the end goal like in your case, you're actually not eligible for the delayed financing exception if any "mortgage financing" was used to purchase the property. That means you need to truly buy all cash (or you could use a HELOC secured by another property). However, you can't have a loan secured on the subject property and still qualify for delayed financing, and a hard money lender is definitely going to require a first position loan.

You can read more about the delayed financing requirements here if you're interested: 

Fannie Mae: What are the requirements for a delayed financing exception?

There's lots to consider with this new law (SB91).  As for whether or not landlords should "take the deal", I think it will depend on a number of factors.  For example, things like: how far behind (how much $) their tenant is behind on rent, likelihood the tenant would ever be able to catch up on their own (without assistance), whether the tenant is collectible should the landlord decide not to pursue assistance and go after a judgment in small claims court instead (some tenants are judgment-proof so the assistance may be a better option), ability of the landlord to weather the storm (do they have a lot of reserves or are they about to lose the property), willingness of the tenant to cooperate in the process (you need the tenant's cooperation for this to work), etc. 

There's so many things to consider that it's going to be different for everyone, I'd imagine. 

As to your other question about whether or not it applies to utilities, I actually think it does.  The text of the law defines "rental debt" for the purposes of the State Rental Assistance Program as the "rent, fees, interest, or any other financial obligation under a lease for use and occupancy of the leased premises". 

I've already attended some training on this new law that was conducted by the California Apartment Association, and in that training their legal folks opined that "any other financial obligations under a lease" could include things like utilities, parking fees, pet rent, etc.
 

@Lisa McClease-Kelly  I have a couple tenants that pay with Venmo.  Works great.  Free and instant. 

@Aaron Rowell What type of property is it?

I rent out single family houses that are guaranteed pest-free when I initially rent them. (If not, the tenants just have to let me know within the first month and I’ll send someone out to treat them.) After that, pest control is the tenant’s responsibility per the lease.

On the other hand, if we were talking about a large multi family property, then I think it’s better that the landlord/property management company oversee pest control since it’s too difficult to treat each unit individually. (Not to mention some units may choose not to even treat if it were up to them.) 

If one unit is infested, and you only treat that one unit, the pests could just move to another connected unit. You’d just end up chasing them around, but never getting rid of them or controlling them. You need a coordinated plan of attack.

So to me, the type of property makes a big difference about who should be responsible for the pest control.

Just my two cents. 

If it was intended to be a flip, it wouldn’t qualify for a 1031 exchange (regardless of whether it was held in your personal name or that of a company).

If either party can terminate with 30 days notice, it’s not an alternative to a month-to-month agreement. It is a month-to-month agreement. 

@Christina Fleet You should check out the following thread (in particular the response in it from Jeff):

Becoming a Private lender

It’s one of the better posts on here (in my opinion) for what you’re trying to do. 

As for minimizing risk, I would suggest things like: sticking to doing first position loans, making sure you lend to experienced borrowers who do this for a living and aren’t trying to learn with your money, making sure you get a lender’s title policy (your borrower should pay for it), proper hazard insurance is in place and you’re named on the policy, etc.

I could go on, but if you read the above post I linked to, as well as the following one (also coincidentally the response in this one from Jeff is particularly good), you’ll be off to a good start:

Private lender - forms required??

Good luck to you!

@Clay Couvillon Not sure if this is a real situation you’re facing, or just a hypothetical “what if” type question. But regardless, what I’d suggest is keep making any required monthly payments and most importantly continue to communicate with your lender! 

Your lender likely does NOT want to foreclose on you. However, some borrowers who are faced with a problem they don’t know what to do about just stop communicating. And in my opinion, that’s the worst thing you could do. 

Your lender may be willing to work with you, but you’ll never know if you don’t talk to them.