All Forum Posts by: Ellie Narie

You have to learn how to run this like a business. When you set a rule and the tenants refuse to comply, then you should have a process for notifying them of the violation and penalties to bring them back into compliance or remove them for the violations.

1. Send a written warning detailing the violations. If able, reference the specific section of the lease they've violated for each infraction. If the violation is blatant (e.g. the unregistered dog) then let them know what they owe for the violation.

2. Give them a deadline for correcting the violation. Check state laws but typically 7 - 14 days is sufficient. I only give 72 hours for an unauthorized animal or person.

3. Conduct a follow-up inspection to confirm they're back in compliance. If they are, your work is done and you just keep an eye on it. If not, then you hit them with a termination notice (check state laws).

If they are a decent renter and there's just 1-2 small violations, I'll call and give a verbal. Most people respond to that and get on track. If there are multiple violations or they are egregious (unauthorized animal, trashing the property, etc.) then I will hit them with a formal, written warning. If they don't correct, I don't bother with a second or third warning and move right to termination.

I posted a written warning on their door a couple of weeks ago, detailing everything. They still haven't paid their dog deposit even though they had 14 days from the date of the warning to pay it.

I'm afraid that they'll "just say" that they'll get rid of the dog, and not actually do it.

I've never evicted anyone before, but I'm receiving a lot of complaints about them and they break a lot of lease violations, so I need them to go.

I also found out that I could do a 30 day no cause notice, since they're within their first year of occupancy. I'm not sure if I should do this instead of trying to evict them. The problem I see with evictions is that I would need a lot of evidence to present to the courts, and I'm not really sure how to go about providing sufficient evidence.

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They leave oil stains by their garage without cleaning up.

The other tenants say they leave trash lying around all the time, and that they leave their vehicles parked in a way that gets in the way of the other tenants' driveways.

They have what appears to be a non-working vehicle parked on the property.

There have been reports of physical fighting going on in their garage and in their unit, but all the tenants of that unit "consent" to it, according to the records, so there's no "abuse" technically.

They have a dog in their unit without any deposit or any paperwork that proves it is a service animal. I set a date for them to pay their dog deposit by, and it's about to be due, but they haven't paid it.

What's the best way to go about all this? I already gave them one warning about all of the above items ("excessive noise", unauthorized pet, parking violations, trash, all in one warning).

I don't want to run into any legal issues about this, so I'm curious what the best plan would be.

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Originally posted by @Logan Allec:

@Ellie Narie Congrats on the househack. I househacked a 4-unit myself in my 20s. I still have it today and it provides great income.

For your first question, let's back up here.

Your depreciable basis is based on what you actually paid for the property; it's the purchase property plus or minus some items on the closing statement as well as any costs you paid outside of escrow that you can include in your basis.

That number is completely independent of what the tax assessor says or what the appraiser says.

When people say to use the assessed value, they're referring to the allocation between land and building.

I think you get this but just want to make sure.

Now, you don't have to use the assessor's allocation if you can come up with some other reasonable allocation.

In my view, using the appraiser's allocation is reasonable. You could also do some more digging...was there a similar plot of land that sold around your property for $100,000 and you paid $400,000 for your property (land and building)? In that case it may be reasonable to allocate 25% land / 75% building.

That said, the IRS likes using the assessor's value and will often challenge other methods. Sometimes they win, and sometimes they lose. There was a Tax Court Summary Opinion a few years back (Nielsen) where the Tax Court sided with the IRS who wanted to use the county assessor's allocation, while the taxpayer depended on alternative methods I described above.

Also keep in mind that because you're living in one of the units, you can't depreciate the entire property for rental income / loss purposes -- only the amount attributable to the portions you're renting out.

As for the points, again, you must allocate between the points allocable to your residence portion of the property and the rental portion of the property. The former are generally amortize as an intangible asset, but you may be able to deduct them in full as prepaid interest in the year you pay them if you meet certain requirements and you itemize deductions. The points allocable to the rental portion should be capitalized as an intangible asset and amortized over the length of the loan.

Interesting. So I guess it's all about proving the IRS about what method I use to calculate the cost basis. I might just go with the tax assessor's values, but I'm not sure yet.

As for the points - since this is a househack 4-plex (FHA loan), am I supposed to deduct 25% of them on schedule A in the year paid, and the other 75% over the life of the loan on schedule E? Or would I be required to deduct 100% of them in full on schedule A?

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Originally posted by @Ashish Acharya:

Originally posted by @Ellie Narie:

I just bought a house-hack 4plex in 2020. I don't have any other rentals. Filing taxes now, so just had a few questions.

1. When calculating depreciation, I heard you're supposed to use the assessed value based on the county records. Well, based on the county records, the land has a 44% value and the building has a 56% value. So, the land is at around 200k, and the building around 250k. That doesn't seem right to me. When I had the appraisal done, they valued the land at 75k and the building at 400k. What do I do here? Do I still have to use the tax assessor value?

2. What do I do with points? I read that you're supposed to amortize them over the life of the loan, so 30 years. When I'm entering all the info for my taxes, it says to enter depreciable assets. So, I entered the building of my property. But for the points - am I supposed to enter the points as a new depreciable asset?

Thanks.

- I wouldn’t use almost 50% as land.
- yes, you need to add an intangible asset.

Would you recommend using the appraised value? Or is there another option for calculating it?

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I just bought a house-hack 4plex in 2020. I don't have any other rentals. Filing taxes now, so just had a few questions.

Thanks.

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Tenant hasn't paid rent. I tried reaching out to them, but they seem unresponsive. They told me they'd pay it a week late, and I still haven't received the payment. I tried reaching out to them again, and they haven't responded...

When January 1st comes, I still can't charge any late fees for late rent for this month and December, right? So, essentially if the tenant is paying $1000 a month, then I'd post a notice saying they need to pay $2000 for November and December within 72 hours, is this right? And if they don't pay, then eviction?

Any other options?

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I am interested in out of state investing because I live in the pacific northwest, where real estate is expensive.

How do you go about finding and buying out of state properties? Should I go with a turnkey provider, or should I just try to look up properties on zillow and trulia and then somehow either buy them remotely, or fly out to buy them? I don't think I want to do much rehab, I just want something that is ready to be rented or is already rented.

Also, what areas do you recommend to invest in? I don't want the properties to depreciate, but I also want a healthy cash flow.

I don't really have any friends or family in any other states, nor have I ever lived in any other states other than Oregon (and I cannot move either), so I'm trying to figure out my best strategy for investing.

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I just moved into my new 4plex househack, into the downstairs unit, because it was the empty one when I purchased the 4plex. Now I'm at a loss. I used to live in a place that was single level, so not quite used to this. Woke up at 6:45am on a Sunday due to a stomping upstairs toddler. That toddler was stomping and running around, in the bedroom... and still is. It's been 4 hours... I get it that kids run around, but at 6:45am on a sunday? I wish the parents would have their kid run in the living room at least, not in the bedroom.

Also, I haven't officially met the tenants yet. I posted notices on their doors a week and a half ago that said that they need to contact me (i left my contact info) to sign a new rental agreement with me. I also sent them these notices by first class mail. Still haven't heard back from a single one of them, so if I don't hear by the end of this week, I'm going door to door (they were all on m2m with the previous property management, but now that i bought it, i will be managing it myself). I'm thinking of including quiet hours on the new rental agreement from 10pm-9am, but is this excessive? I just don't know what to do about that toddler literally nonstop stomping around and running around in the bedroom so early on a weekend.

Any soundproofing recommendations? Or what should I do about this situation? I am from Oregon and these are long term tenants that have been there for more than a year.

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I bought a 4plex, and I bought it at 10% less than the appraised value, so essentially I have 90 LTV. I bought it using an FHA loan and have to move in within 60 days.

How soon can I refinance? It's at 90 LTV so I'm wondering if there are some banks that allow refinancing, where I wouldn't have to occupy it after refinancing. Should I wait 6 months to a year, or should I just do it sooner?

It doesn't need any rehabbing or anything like that. I just want to get another FHA loan to get another 4plex later on.

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Originally posted by @Daniel A.:

Originally posted by @Ellie Narie:

Originally posted by @Daniel A.:

Hello Ellie,

While I have lived in Oregon and have spent a great deal of time educating myself on Oregon Landlord/Tenant Law, at the moment I am working on acquiring properties in Texas and unfortunately don't have the time to find the applicable law to send your way. But I do have a moment to toss out some ideas.

For one, since they are on a month-to-month lease, it's not really a matter of you having addendums for them to sign or not to sign. What you do is instead of renewing their current month-to-month lease, you provide them with your lease and your addendums as a means of continuing tenancy after you have provided them with the appropriate notices. The lease they likely have now is from the management company. Once you buy the property, I don't believe you're obligated to continue on with that management company. You just need to let them know that you are the new owner and that you no longer require their services. You (or the seller) will also be advising the tenants that a new owner is in town, and that you will be advising them of the new procedures. This includes where to send the payment and who to call when maintenance issues crop up.

Of course, if the management company has a contract with the previous owner for management services for a certain period of time, then you'll have a situation to deal with. But, in all honesty, I haven't really spent too much time with management companies, so I couldn't elaborate on the particulars there. (You could probably also ask the current owner to contact the property management company and have him cut ties for you.)

By and large, if you have any documentation that changes anything in regard to the tenants, they have to sign those documents. If you could create documents and the tenants weren't required to sign them to make them legally binding, then that essentially opens the door for ill-intentioned landlords to incorporate new rules and procedures without the tenant knowing, and then take legal action against them when they (the tenants) didn't know. Having all documents signed by all parties also ensures an easier process for you, the landlord, should a tenant claim they had no idea. If you get verbal confirmation but don't put it in writing, the courts generally won't side with you.

As to the property management company, I have pasted a couple links below for you to read:

https://secure.sos.state.or.us...

https://www.thebalancesmb.com/...

If I provide tenants with a new lease, do they actually need to sign it? I mean, they have no choice that the property management is changing, so it wouldn't make sense if they need to sign it.

Can I just cross out the property management's name on the current leases, and just add my name to it and provide the amended lease to the tenants (without requiring them to sign anything)?

____________________

Hello Ellie,

Essentially what it boils down to is this: Their current lease is effective until its expiration date. If you plan to release the property management company from their role in the management of the property, it's likely that their leases will leave with them. Their leases will be valid until the month is up. You can choose to continue the lease if you feel it is in your best interest, but I'd like to outline a few reasons why it's better that you give the tenants a new lease - your lease.

To start, a lease is what protects your investment from tenants doing things that aren't in the best interest of the property. Property management companies have different goals from you, and while their leases are usually pretty sound, I've seen some property management companies providing leases that miss a lot of valuable clauses. If you take the time to make your own lease, you get to decide whether it's okay for tenants to park rusty, dilapidated cars on the front lawn. You get to decide whether it's okay for tenants to hang political flags from their windows, visible for all to see and for all to make assumptions about your property. You get to decide whether a tenant is allowed to sublease their unit. Assuming the property management's lease will cover such things is assuming that your tenants will respect your property -- it's unwise.

I generally err toward year-long leases for a variety of reasons, but each time I renew a year-long lease, I provide the tenants with a new lease. It's essentially the same lease, occasionally with an update. It also includes the new dates. So, my assumption with month-to-month leases is that you would need to provide them with a new month-to-month lease with the updated tenancy dates. If there is no property management company, there is no way for you to extend the lease another month unless you copy their lease. (And some property management companies have copyrights on their leases.)

And with contract law, if anything is changed or revised, you must have both parties acknowledge the change. The reason for this is that, suppose a landlord decides to cross out the $800 / month rent and replace it with $1000 / month. Both parties must be apprised of the change and must agree with it. In writing. Even if it's just the change of name.

May I ask why it is that you are looking to avoid having them sign anything? I understand that it might be "a process" to have to go to them and inconvenience them with something that is seemingly mundane, but it would give you a chance to meet your tenants and let them know who you are and that you are happy to help with any issues that may arise. I would even go so far as to ask them how they've enjoyed living there and inquire into any unresolved complaints they may have.

Well, to me it just seems like it could create issues if tenants refuse to sign it for whatever reason.

If I have tenants sign new rental agreements with me, how do I go about this? Should the new rental agreements start on the same date as the closing date? And if so, how much time should I give the tenants to sign it? Closing at the end of May, so I will need to receive June rent from the tenants.

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All Forum Posts by: Ellie Narie

Ellie Narie has started 94 posts and replied 200 times.

Post: Best way to evict a problematic tenant in Oregon?

Post: Best way to evict a problematic tenant in Oregon?

Post: Tax assessed value or appraisal value to calculate depreciation?

Post: Tax assessed value or appraisal value to calculate depreciation?

Post: Tax assessed value or appraisal value to calculate depreciation?

Post: How to evict a tenant starting January 1st in Oregon?

Post: Advice on out of state investing? How do you do it?

Post: Upstairs tenant's toddler runs around loudly all morning.

Post: How soon can you refinance an FHA loan?

Post: Do tenants need to sign an addendum after you buy? (Oregon)