All Forum Posts by: Wes Shive

@Mooko King, I won't address the issue of the school system, etc. I think it's hard to know for sure what's going on without being there first hand. Anything conclusions drawn here are mostly going to be speculative. The important thing to focus on when qualifying a tenant is what is documentable. Credit, criminal/eviction history, income, and photo IDs--these are what you can document. From my own experience, if I simply stick to these items and know nothing else, I manage an excellent batting average when it comes to tenant selection.

First off, if ANY of the adults who will be on the lease have evictions or violent or drug related criminal convictions, I reject the entire group/family. Also be sure to look for judgements against them where the plaintiff looks like they may be a landloard/real estate company. Sometimes judgements are awarded but evictions don't show up.

I next look at credit line by line. I try to understand the nature of the negative items. Remember that people with several positive lines and zero (maybe 1?) negative credit lines are as close to a sure thing as you can get in this business. Good and especially excellent credit is NOT an accident. You have to be very organized and on top of things to maintain a high credit score.

In your case (again, ignoring the school issue), I would rent to them so long as the above I mentioned holds true. (I'm assuming that with a credit score of 730 they probably have 0-1 negative credit items or a ton of positive and a couple negatives max.) When the main bread winner makes enough on their own and they have excellent credit, I give a pass to the other adult(s). In a way, I look at them as a co-signer but better since they're actually living in the unit. For me, this only holds true if they are related. If they are roommates, I look at things a bit differently. Hope this helps.

Moses, thanks for the rec! We collect coins ourselves for now, but I agree about the laundry contracts. Those guys must make a killing. It's like they have their own coin laundry but without the cost of the space or utilities plus they have a built in client base.

Hi all, just wondering if anyone has any good recs for commercial (coin-op) washer/dryer repair in the Los Angeles to Orange County? This is for a MF I manage in Downey. I can search on angie's list, yelp, aoa, but wondering if anyone have a good first hand rec. Thanks!

IMO this is a personal risk tolerance issue. If you perceive the risk of knowing about this behavior and doing nothing about it as low, then do nothing. If you perceive the risk as high, do something about it. I would personally take the opportunity to look at his rental app and BG and credit checks. Did you miss something? Does he have any convictions? Is his credit good or bad. If it's bad, maybe you dropped the ball. Take it as a lesson, get him out, and find a better tenant. If he has good credit, I would give him a pass and monitor the situation closely. Remember, you are not the police. It is not your job to report this. You are a landlord. It is your job to cover yourself from liability to the level you are comfortable with. (If that means reporting it, then so be it.)

If you want your tenant out, take the cash for keys mentality. Keyword: mentality (not approach, necessarily). We all know it HURTS to pay someone to move out when we are in the right, but this approach can often be MUCH cheaper than the alternative. You have to adopt this mentality when dealing with these types of situations and leave ego at the door. This is a business.

Don't go instantly to the nuclear option by calling the cops or threatening eviction. The best landlords are able to talk people into doing what they want. Through proper application of reasoning and a subtle carrot and stick approach, you can get reasonable tenants to do just about anything so long as you are being fair on your end. Don't make the painful mistake of doing things strictly on principal or some sort of rigid dogma.

Have a talk with him. Tell him you saw the substance. You don't want to go to the cops or evict him, but you're not comfortable with that on your property. Ask him to move. Give him 30 or even 60 days. Tell him if he moves out, he'll get his entire security deposit back less cleaning fees so long as he leaves the unit in reasonable condition. Make good on that promise. If he refuses tell him that you will not renew his lease. You will ask him to move anyway when his lease is up. But then you will deduct everything that is reasonable to deduct from the deposit when he does move out. And if he's the least bit late on his rent, you will promptly file for eviction. You will do regular maintenance checks. You will contact the authorities if you see that happen again. He will be under the microscope.

Do this and 9 times out of 10 you'll get him to move out because you're going to be a pain for him in the place that he lives. Yet you'll be doing it all reasonably and within your rights as a landlord. And if you've explained yourself clearly enough, he'll know you're doing it because it's just business--you're not doing it out of spite. He'll move out.

Tyler, I don't want to be a naysayer here, but I think handling a 10 unit multifamily is most likely biting off more than you can chew given your lack of experience in real estate. If you MUST go this route, I would 100% agree with @Tom Mole that you should do this with an experienced partner. Be prepared to put a large amount down to get things to cashflow. Multis in CA and especially LA are expensive right now.

I would encourage you to consider starting off with small SFH or maybe a small multi (2-4 units) in order to get some experience with not only management of the property but the actual costs associated. Pitfalls will abound but your mistakes will be smaller and more manageable.

Jaime, if your main concern here is liability, LLCs actually don't offer as much as one might think. The better solution is to get a good umbrella policy. You may also consider a GOOD property manager as they will know what you can/can't/should/shouldn't do with your tenants.

LLCs in CA cost $800/year to maintain. My umbrella policy cost $864 for $3MM coverage. Given the option for only one, I'd much rather have the umbrella. Keep in mind this is in addition to regular liability insurance.

Brandon, I think you have the play the numbers game here. Talk to as many people as will sit down with you. Talk to anyone. Talk to everyone. Talk to people in person, talk to people over the phone, talk to people here on BP. In doing this, you will figure out the right questions to ask and you will also better know what to look for. Don't feel the need to "know everything" before you start doing anything. This is one thing that keeps most people on the sidelines.

On this front, I'll offer this piece of advice... When you talk to someone, ask about their expertise. Ask about their business, not just what you want answered. People who are truly passionate about what they do love to talk about their business. Often times you'll glean much more from them than what you thought you wanted to learn from them.

IMO though it's probably more important to get a mentor who can teach you about how to wholesale than to have a ready buyer's list. Remember if you have a truly good deal, they will come, even if your buyers list consists of posting on craigslist or in the BP marketplace or even unsolicited direct mail.

@Naveen Desai no, not just hypothetical. Sent you a PM.

@Matt R.  suggested, you should put some serious energy into finding financing options for your Fontana home. IMO, don't sell unless you really have a good reason.

If you've got good W2 income and not too much debt, shop around the bigger banks. If you're looking for more "exotic" (non-conforming) financing, look at credit unions, smaller community banks, and maybe a good mortgage broker. As always, be careful not to overextend--budget for the downturns.

Also, I'm guessing you didn't move out of there within the last 3 years? If so, the home may still be eligible for the cap gains exemption for your personal residence.

14th of the 6th month? Generally people aren't sticklers to that sort of thing. Best to talk to the tenant and ask if that is an okay end date. Not worth it to haggle over a few days. Most of the time they'll stay past the end of the lease term anyway, in my experience.