All Forum Posts by: Ed W.

@Brian Dillon  My best advice is to talk to a LANDLORD-TENANT attorney (not a general attorney).   I don't know Tennessee law at all but in Ohio, if you have a valid lease, the property is yours for the entirety of the lease UNLESS it has a provision that allows termination with notice if there is a sale.  I don't know if it is still true, but at one time in NJ if a property was sold and the new owner was going to live in the property, the new owner could give notice to the tenant and effectively void the lease effective in (if I remember correctly) 60 days.  Bottom line, you need an attorney who understands the laws that are in effect in your area AND can read your lease to form an opinion about what you agreed to.  Good news is that many landlord-tenant attorneys should have some free time since they won't be going to court for a while.

@Nathan Gesner  I'm not an attorney either and you may be 100% correct that state law might void such a provision.  My rejection of the contracts was based solely on my reading of what was written and what was represented to me by the property managers.  At the point they said they wouldn't change and they didn't disagree with my understanding of the intent of the wording, it made no sense for me to proceed and made no sense to pay for a legal opinion.

@Nathan Gesner From your point of view, with limited information, you assessment is quite reasonable, thank you.  However, I've had more than one conversation with more than one company and have pointed out the language, given them examples ("Mr. Property Manager, if you violate a Fair Housing law related to one of my units, the penalty could be $10,000 and legal representation would likely be necessary at some cost in the thousands of dollars.  As I read this, it's pretty straightforward and unambiguous that I have to pay those dollars as part of indemnifying you."  I've had at least 2 (probably more) check with their attorney, confirm my understanding, and refuse (on advice of counsel) to remove it.

@Nathan Gesner and other other property managers.  I have a fair number of units and I've always been a pretty hands-on guy for pretty much everything in my business except for maintenance (anything more than minor repairs and I'm likely to do more harm than good!)

A few times over the years (I've managed rentals for over 25 years), I've looked into using management companies.  I've looked at big ones and small ones, including some that have come with good recommendations.  Almost every one that I thought was credible had contract wording making me assume the liability for the manager.  In my simple brain, the nerve of them asking in the first place, I always wondered why anyone would indemnify a supposed professional for the professional's errors and why would those supposed professionals not stand behind their mistakes?  I've tried to negotiate those way - always without success.  If I'm going to take on the liability, I may was cover my butt by doing it myself.

@Ki Lee I'm not smart enough to know what the particular percentage of these panels start fires but the question should not be what your cost is going to be, the question is how much danger your tenants will face.  If I were in your shoes, I would pay a competent and unbiased electrician to inspect the panels to determine if they are safe or not.  If they can't determine that, I would bite the bullet and change them out.

Here's what I can guarantee you.  If there is a fire and there is an injury there will be a lawsuit.  The attorney representing the plaintiff will, at a minimum, do an internet search of your name and your company name and will quite possibly find this forum thread.  It will show that you are on notice and, so far at least, it will appear that you are making a decision based on your wallet at the possible expense of lives.  I'm not saying that is how you will make your decision - I don't know you and I don't know how you actually make your decisions - but I do know how this will look in a court of law - horrible.  The only question for a jury will be how large they want to make the settlement and the question for the DA will be - was this a case of reckless endangerment and should someone go to jail (this part regarding a District Attorney is speculation on my part from too many episodes of Law and Order but you should consult an attorney to see what your legal responsibilities and legal liabilities are).

@Peter Lohmann  You've clearly pointed out some very important considerations when trying to determine, for example, if a proforma is ridiculous on its face or if a seller or agent is being deceitful in their representation of expenses (not uncommon for some to "trimmed" or not considered at all).  

I do believe that, particularly for the newbies on this site, property taxes might be a good addition to your list since they are always a considerable percentage and a footnote related to whether or not you are including capital expenditures in some way under repairs would probably be helpful as well.

@Adam Rich   Very generous of you to share all of this very helpful information.  Thank you.

@Adam Rich  That's great information, thank you for sharing it.  Could you please provide a perspective through some sense of the minimum number of units that could comprise the rental dollars per square foot numbers.  

@Charles Day

A fix and flip is a lot to take on for a first deal without some pertinent experience.  The more of the following that you have, the better the chances of succeeding will be.   If you have little or none of the following, you should consider working with someone who has a lot of good experience and good reputation for integrity.

Do you have any experience buying, selling or brokering real estate?

Do you have any experience with the building trades (are you a general contractor, carpenter, plumber, electrician, etc.) or have a very good relationship with someone very knowledgeable?

Do you have any experience with real estate valuation?

Outside of real estate, are you or have you been an entrepreneur or sole proprietor of a successful business?

Have you worked solely for commission as the main source of your annual income?

Do you have good cash reserves that can be used along with the loan?

@Angela Regalado

My experience in the New York City Metro area is pretty limited (10 years, 1 property) but I found the law to be grossly unreasonable and significantly burdensome as a landlord.  I want no part of it.

I have extensive experience in Columbus and Central Ohio - decades and many units.  Up until recently, the laws were reasonable and applied more or less fairly with a slight to moderate bias towards the tenant (the landlord-tenant courts are conducted by magistrates who are ultimately answerable to judges but who, in 99.99% of the cases, are the final word, and have a tendency - if given any sort of excuse - to rule in favor of or at least grant a continuance to the tenant). 

Over the past 18 - 24 months, Legal Aid has significantly ramped-up their presence in the courthouse (I mean they literally have tables and attorneys in the courthouse to help tenants on the fly) and they are getting much more aggressive legislatively.  Eviction times can be doubled or more if they get involved - particularly for evictions that do not involve non-payment of rent.  Evictions for non-payment may be stretched out as well but that is always the preferred cause of action.  There is has also been an uptick of claims (a higher percentage than in the past are manufactured claims) of landlords having code violations and various other infractions.  

Landlords in our area are just starting to get active to deal with this challenge.  I personally don't have a problem with landlords being held to account for sub-standard housing.  Tenants deserve safe, well-maintained units.  I have a big problem with landlords paying the price for problems caused by tenant-created damage, especially damage caused by the tenant to create a problem for the landlord.

Despite these new challenges, Columbus - so far - is a much better area than most IF YOU TAKE THE TIME TO LEARN HOW TO MANAGE CORRECTLY; GET A GOOD LEASE FROM A VERY EXPERIENCED, VERY ACTIVE LANDLORD-TENANT ATTORNEY (NOT A GENERAL PRACTITIONER) AND USE THAT ATTORNEY TO INITIALLY GUIDE YOU TO STAY WITHIN THE LAW; LEARN THE APPLICABLE LAWS AND APPLY AND HONOR THEM RIGOROUSLY; AND SCREEN TENANTS VERY CAREFULLY.  ALSO, IF YOU GET A RENTAL AND CAN'T AFFORD TO KEEP IT VACANT FOR 3 MONTHS WHILE YOU WAIT FOR GOOD TENANTS TO APPLY, DON'T EVEN BOTHER (YOU'LL SELDOM HAVE TO WAIT THAT LONG BUT IF YOU ARE UNDER FINANCIAL PRESSURE TO FILL A UNIT OR YOU DON'T HAVE THE TIME OR THE PERSONAL FORTITUDE TO SCREEN CAREFULLY AND ACCEPT ONLY GOOD TENANTS - YOUR CHANCE OF SUCCESS IS VERY LOW).  YOU ALSO NEED FINANCIAL RESERVES FOR REPAIRS THAT INEVITABLY WILL BE NEEDED AND, ESPECIALLY IN THE BEGINNING, FOR LEGAL ASSISTANCE.