All Forum Posts by: Travis Lloyd

"Store" the stuff by leaving in the apartment and get an extermination company to start treatment. You can have them bag the mattresses as well on their first round. Bed bugs should get a few rounds of treatment to kill off in full - so start that process. Its not like you can rent the unit anyways.

Count to 30, then throw away, and do one last treatment after removal.

There is a lot of talk about PM fees on this site, and I think its important to understand that most of the PMs that people here are dealing with are small to medium. And just as many of the investors here glean insights into practices from 'the big boys' (PE funds and REITs), so too do PMs from their 'big boy' equivalents.

So to understand a little better the PM business side, you should look to the billing practices of the large PM companies across the country. Their standard is not 10% flat fee - the standard is closer to 3% of gross collections, but that 3% covers only Normal Business of Administration (accounting of rents received, receiving and recording of bills, payment of bills and expenses for the property, ensuring taxes are current, and being the front line of contact for tenants). ANYTHING beyond that is billed hourly, and that rate ranges depending on exactly where you are, but we billed out at $100 in NYC, $65 in Kentucky, and I think $75-80 in Florida?

What gets billed hourly? Everything beyond Normal Business of Administration: attendance at court or municipal services, granting entry to contractors and subcontractors, visits to assess damages or respond in person to calls from tenants! Basically if we leave the office, we're getting paid. This will sound absurd to those of you paying a small company/person 10% to handle everything - but this is how its done among the largest PMs and anyone wielding portfolios over 1k units.

So to the point at hand: who gets the late fee? At a corporate PM, the late fee is deposited to the owner's account, not kept by the PM. HOWEVER, that late fee (and the rent collected) likely took at MINIMUM 1 billable hour to actually collect - and so the PM bills the property for that hour! So I can understand how some smaller PMs who charge a more simple rate structure of 10% flat are pining for that late fee - a collected late fee represents additional work. Because most tenants who pay late don't simply send it in late - they usually require a bit of prodding.

With all that said - to the OP - its a bit absurd of them to spring new contracts on you with no warning, that include so many changes. They will act like all of that is "the new boilerplate" - but everything's negotiable. Push back and get an agreement that suits you!

IRR is a function of time. You need to sort out all of your outlays up front, as time 0, then run a model to the expected horizon, annually, +5 years. From there the IRR calculation is a simple excel function. If you want to send over more details, message and I'll help.

The PM wants nothing to do with your money - however, depending on how large they are they might have processes surrounding transition of ownership that would require them to forward the money to the closing attorney's escrow. Its very VERY common for this to happen - so most PMs aren't thinking "Oh no whatever are we to do about this?"... they have a process. Contact the attorney you closed with, and have them reach out to the sellers attorney. The check will make it to your hands in no time at all.

Pets are simple if you set out the rules in your favor. You want three things: Non-refundable pet deposit (or fee - depending on the rules in your state), monthly pet rent, and a clearly defined set of what is and is not covered upon move-out.

Pet deposit - doesn't have to be anything crazy. Think of it as covering an extra heavy cleaning at move out and a little extra bonus for spending the time doing the calculations and a little something for your trouble.

Pet rent - do you have hardwood floors? You'll be refinishing those when they move out. How long do you estimate they'll stay? Typical SFH - budget 2.5 years. Townhouse/Apartment - 1.5 years. How much will it cost to refinish all of your hardwood floors? Divide by number of months - congratulations that is your pet rent (or add a little bump if you think you can get it).

Rules - the pet deposit and pet rent cover the additional REGULAR wear and tear on the apartment - which is really just saying floors, but in the lease you specify that it is for REGULAR wear and tear on the apartment, and specifically does not cover damage to trim, moldings, doors, windows, cabinets, or built ins (basically anything with wood - which they chew). Any damage to these things will result in the forfeiture of your security deposit yada yada yada.

Pets are great because tenants with pets have far more limited options. By planning and budgeting appropriately - you get to turn their limited market into better profits for you. I just rented a SFH with a $120/mo pet fee for 2 (small) dogs, plus a $250 one time pet fee. And the tenant was ecstatic that they could move in with their pets!

From a maintenance perspective, agree with the comment above about changing air filters more frequently, but what does that cost - $20 and 10 minutes of time? I love pets.

Start by calling your attorney, then (assuming your attorneys approval), your insurance company. This is why we have attorneys and insurance - for situations such as these.

Congrats on closing! 

The security deposit bit is easy - offer them to pay it over the next 6 months (or 3, or 12 - but I don't suggest 12). You get two things out of this - it buys you some time with them staying (and it sounds like you hoped/planned on some tenant stability), AND they get used to paying a bit more.

Now you can't just show up and demand a security deposit - that has to be accompanied by a lease. It sounds like your tenants are well off their last leases (which is a shame - even if your lease converts to month to month per the terms, always sign renewals and keep them current). So go in, offer them a 12 month lease with the security deposit broken up over the first 6 months, then they get the next 6 months at their old rent... and 90 days prior to that lease's expiry, let them know that the rent will be increasing at renewal.

My 2c anyways...

Not disagreeing with how it should be run - just saying how it often happens at larger firms - or even a mismatch of asset classes. I knew of a firm that was 80% condos, and most owners of the remaining 20% multis had fairly long lists of complaints about the management. There are a lot of factors really - but the match between the owner and PM is as import a match as the tenant to the unit. 

So a few things to note: its possible the PM DID put the utility bill in the tenants name. In many utility companies, if they never receive a payment or any response to correspondence for a tenant, they will put the charges BACK on the house account. So that is a possibility.

The fact that you're not getting any explanation of how, or any advance notice - simply discovering the charges in your statement is what again points me to a size mismatch. Find a smaller PM who can give you a bit more personal touch. I worked for an NYC firm with over 2k units under management - and the owner with 300 of those units gets the most attention. The owner with 2-3 got the barebones... its just the way of it. Now I'm back to small and private - and they all get that attention.

Agree that neither fits a class B... sounds like you're realizing its a class C. The tenant with a default from 2 years ago is certainly more problematic than the tenant with a default/foreclosure in 2013 via divorce. You might toss both back in as undersized and keep fishing - but if you must take one, go with the 2013 default guy.