Need Encouragement please
Hello, Rookie here! And I just booked my first deal!! Closing late Oct in Rochester NY! Pretty excited! I got a 4 Unit Complex with long term tenant who seems to be current. But need some encouragement because I’ve been reading up on tenant laws in NY and listening to podcasts that are starting to scare me. If a tenant is late, they have up to 14 days to pay, however if they hold up in court for a valid reason, they have another 14 days, that’s almost a month. Which means they’re almost due for the next months rent. Does that mean they have to pay the double rent they missed from the previous month, or did they just a get free months worth of rent? What are causes where a tenant can end up living in your rental for free for a year? Also can a seller hide the fact the tenants can be squatters in the property? Sorry now I’m being pessimistic with all the things I’m hearing.
Did I do the right move investing in NY? What are the benefits in investing here? Any good stories?
Quote from @Karmina Luna-Dominguez:
Hello, Rookie here! And I just booked my first deal!! Closing late Oct in Rochester NY! Pretty excited! I got a 4 Unit Complex with long term tenant who seems to be current. But need some encouragement because I’ve been reading up on tenant laws in NY and listening to podcasts that are starting to scare me. If a tenant is late, they have up to 14 days to pay, however if they hold up in court for a valid reason, they have another 14 days, that’s almost a month. Which means they’re almost due for the next months rent. Does that mean they have to pay the double rent they missed from the previous month, or did they just a get free months worth of rent? What are causes where a tenant can end up living in your rental for free for a year? Also can a seller hide the fact the tenants can be squatters in the property? Sorry now I’m being pessimistic with all the things I’m hearing.
Did I do the right move investing in NY? What are the benefits in investing here? Any good stories?
Why does the 4 plex have only 1 tenant? That is either a red flag or an opportunity. I don't know which in this case.
Ask the seller to state in writing that the tenant is not a squatter. See what he says.
Also ask the seller for a rent role and to scope the sewer line. Yeah, sewer lines go kaput and it can be a $20,000 problem.
Where is your agent in all of this?
Ask for an estoppel agreement as proof the tenants are paying. Talk to the tenants if you can. Eviction will take much longer than 1 month in NY from what I've heard. I have an emergency fund to account for at least 6 months of not getting rent, in my eyes that's just the cost of doing business in NY. Of course not everyone is so conservative but I don't want to have to borrow money to pay my mortgage if an eviction happens. Since sewer scope was mentioned I would recommend getting sewer line insurance regardless of the condition. I would highly recommend taking a class on landlord tenant law for NYS. There are also several Property managers in Rochester you may be interested in that I would guess have procedures for this.
Quote from @Karmina Luna-Dominguez:
New York can be a tough place to invest, but you can definitely handle it if you put in the work. Start reading the laws now. Start thinking about all the things that can go wrong. Make a list and rank them in the order of what is most likely to happen first. The start researching how others handle those problems and develop a plan. One problem a week and your list will easily be done in less than a year. It's a tough process, but you'll be so happy if you make it through.
Your list will include things like: how to market, application screening, collecting deposit, moving tenant in, tenant pays late, tenant doesn't pay at all, tenant abandons property, tenant wants to add a dog, etc.
The most likely thing to happen first is you'll need to market a vacant unit, so start educating yourself on that process now.
Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice pertaining to management of investment property, has sample forms that can be edited, and - most importantly - they tell you what your primary state laws are and where you can read them. It's updated every year and is the best $40 you'll spend as a Landlord. There is one book for 49 states and a separate book for California.
@Karmina Luna-Dominguez I invest in Rochester NY. I can, indeed, be a tough place to be a landlord, but you can be successful. First, try not to get emotional. It doesn't help. It is just business. Most tenants are good.
Yes, it can take months to evict a tenant for non-payment. First, you will need to issue a 14-day pay or quit (leave) notice. If they don't pay you can take them to court. That may take two months. Once in court they can come up with some excuse and eviction stayed for a month or so. Then they are served a warrant by the sheriff, and have another 14 days before they are finally forcibly removed if they haven't already left. So, all-in-all, you can figure 4 months, plus a few hundred dollars in expenses. I recommend having an atty handle it all for you.
Congratulations for your first deal.
You can start understanding the local market and the rental behavior.
Also consult an attorney to understand all the laws.
A local Investor-Agent can help shorten your learning curve and save you a lot of headaches as they tend to understand the market better.
All the best!
-
Real Estate Agent Texas (#736740)
- (832) 776-9582
- https://tinyurl.com/f4ce9n8j
- [email protected]
- Podcast Guest on Show #469
@Karmina Luna-Dominguez what did you pay for the 4 plex?
I will be able to predict your experience based on the sale price.
I’m NY state tenants do not ever get to live for free. They always owe the rent. The problem is the eviction process and collecting rent.
The process if ERAP is involved, there are maintenance complications, and a tenant friendly judge can take 6 months.
The collection process if someone gets to far behind is difficult. You need to get a judgment against them, then you need to find a way to collect afterwards. We have moved far away from debtors prison.
If you bought a high risk property in NY, you can cash flow like crazy if ALL goes well, or you can end up understanding the risk side of high risk.
NYS is a tough place for landlords. I'm small, but growing as a landlord in the LTR game in NY. I agree with Nathan Gesner. Start reading about NYS Laws and pending legislation. Consume as much material as possible and think it through. The NYS Legislature puts forth landmines that are "suppose to help" landlords like ERAP, but it is a backdoor for you to be stuck with problematic tenants.
Try to get to know landlord friendly attorneys within your area. Mike Butler suggests taking a day and watching the action at Housing Court. You will see the docket and listings of attorneys who are representing landlords in court. These attorneys can help you with the 5 day notice and 14 day notice you have to now provide tenants in NYS. (non-payment docs prior to eviction process)
Get an attorney to draft and send docs for you. This is a small price to pay in order to alleviate stress and heartache. NYS will torture you if your procedure and process is even slightly off. In NYS, landlords are the enemy.