All Forum Posts by: Ted Klein

@Anthony Wick It was a free call so nothing lost. I had searched the legislative website for the information, but had gotten into the wrong section about mobile homes and didn't notice it.

@Anthony Wick I had similar feelings about @Sen A. comments as well, however, he ultimately provided the best advice to consult my attorney before taking action which I did. See my previous response for the explanation of how things worked out.
This increase will bring these tenants up to just a shade below the market rate, the increase is to cover the increased cost of the property tax increase this year. IMO, I don't like to be at the market rate, but just a bit below market so as to provide value and incentive to stay longer as turnover cost can eat up a few extra bucks squeezed out to be at the market rate.
When the tenant starts shopping around, they will see that if they were to move, they would likely pay more for usually less. So far this approach has worked great for me.

@Bill B. @Kenneth Garrett

@Will C. @Theresa Harris @Sylvia B. @John Barrett

@Ned J. Thanks to all for all of the good comments and recommendations. Following up on and  the @Sen A. comment to discuss this with a lawyer before taking any action proved to be the most helpful. I had searched the Washington State Legislature website for "Rental Increase" and found what I thought was the correct description of the current law. After consulting with my attorney, he was quick to inform me that the section I referenced above pertained to Mobile Homes and not Residential Property. He also informed me that the required notice was only 30 days so I am well within the required notification limits.

This goes to show that a quick Google search isn't always going to get the correct answer and that a thorough understanding of the law is paramount to making the correct decisions in this business.

Thanks to all for your input

@Marcia Maynard  @Account Closed

I have two fantastic long term tenants that I'd like to keep. Both always pay on time and take great care of the place. I thought that the proper notification of a rent increase was only 60 days notice, however, I researched the Washington State Law and I see that the law is actually 90 days notice required. My problem is that the current lease expires on July 31st which is currently only 77 days before expiration of their current lease.

I intend to send the notification of increase with a 90 day notification but I need advice on my three options:

1. Explain to my tenants my mistake of the 90 day notice and ask them if they would still renew with only 60 days notice and then give them the first month of the lease term at the current rental rate? This would be written into the lease agreement like a discounted rate for the first month.
2. Let their current lease expire with a  Month to Month agreement for 30 days and then have the new lease set to start on September 1st.
3. Should I write a lease agreement for 30 days and then another one for a year starting in September?

I want to ensure I stay within the law, but I also like my leases starting in the summer. It seems the most logical is to go with option 1 or 2. I like option one the best, option two has more risk, but as I said, both are outstanding tenants and I wouldn't expect any issues in 30 days, but... you never know.

Thanks in Advance

@Rashid Bailey You will still need to work on lowering your DTI regardless of whether it's your moms house or not, banks won't care about that. As @Clifford Paul had mentioned try small credit unions, they keep their loans in-house so they can carry their own underwriting criteria. The big box banks BOA etc.. will have stricter qualification criteria’s and most would require a DTI below 38-42 and two years of seasoning to claim the rental income. @Chris Mason could explain how the lenders apply their own overlays and what challenges you will be facing. 

@Horacio Gutierrez I use ACH transfers. I setup a separate account for each property and this is their deposit account. As @Wesley W. Mentioned I sweep the money out of the account as soon as I get the text from my bank. The tenants should be responsible for ensuring that their rent is paid on time. The CVS option sounds viable if there are no fees involved.

@Rashid Bailey I agree with @Caleb Heimsoth at 50% DTI you need to pay down your debt. At a 32k purchase price these are probably a higher risk property or a deal that would require some rehab dollars.

Either way, it sounds like you are putting yourself into deeper debt. What would your DTI be if you we're to find a lender??

You can’t work your way to wealth and working 12 hour days isn’t exactly enjoying life. I know everyone is excited about getting started investing in RE but putting yourself into a deeper hole to acquire some potential cash flow on properties of this level isn’t what is going to get you there.

This isn’t what you want to hear and may sound Ramsey’ish, but I would say sell the properties you have, payoff your debt and start saving to buy these 32k properties for cash.

@Joe Splitrock @Colleen F. I appreciate the suggestions on the cards. I really don't expect his spending habits will change, (at least I hope not), he appears to be very frugal.

@Ryan McKelvey I actually owned up to my mistake in the OP "I have re-read the OP and my subsequent reply and I clearly have demonstrated that I was trying to find a reason why something someone has done may be wrong in the eyes of a parent. My bad on this, I should have known better." Looking at it from a landlord's perspective, I wouldn't want a co-signer either. I think my parental instincts were brewing and I made comments that thinking back on, I actually know better.

@Joe Splitrock

Update... Leasing company called and said he was approved, apparently his salary being 3x rent was well above their 2x requirement.

I also require 3x rent on my units so I was surprised that the limit was only 2x given the high rental prices here in Seattle. Must be because they are catering to University Students.

Because of the availability of public transportation, he sold his car years ago saying that he didn't want the extra expense so suggesting a car loan wouldn't appeal to him.

I like Nathan's idea to give him the book Set for Life. Time to see if that parental advice over the years actually makes a difference.