Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
I have a fourplex in Houston, TX and I live in SoCal. I have been going back and forth in legal matters trying to renegotiate our lease rates with my tenants. They are using it as an Airbnb Arbitrage, which is violating the lease agreement. When I purchased this property, the rent includes utilities and it's putting me in a negative every month. Since they don't want to renegotiate, I've decided to evict them.
Suddenly, today, when I tell my PM to put up Eviction Notices on their units, they send me an email giving me 30 days notice that they will end our contract on August 18th because they don't want to be part of the litigations. They're telling me since I have my attorneys helping me with the eviction process, they should be the ones to put up the notices.
What is the best way to go about finding new tenants and who can help me in this process? I have a well-qualified attorney, separate from this case, that is planning to partner up and create a new management company. I want to use her to manage my property but it's not up and running yet.... although she is helping me and giving me advise as I go thru this case, I wanted to get more insights from my fellow investors here in BP.
1. Should I have a RE agent help me find tenants? screen tenants and check their background?
2. Should I hire a new PM in the meantime to just help with finding tenants?
3. Should I try to connect with Harris County Housing Authority to find tenants?
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
Why, if you have a PM, are YOU now dealing with Rental Agreements and evictions? Who is named on the Agreements, you or your PM company? If you, the Tenants should have been notified of a "change in Management", and been dealing direct with the PM.
Of course, depending on Local Laws and the terms of your "Management" Agreement, maybe this is acceptable, but ours always state that we are contracted "To Manage" the described premises, so I would probably be firing you too. Sorry, I know that is not what you want to hear.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
First- How successful were the illegal Arbitrage rentals? If they are doing well I'd consider self managing or getting your new PM friend to help set these up as STR's.
You can get a local friend or pay a RE or the attorney to get the notices on the door. Do that right away.
Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
3y
@John Underwood The tenants asked me if I was interested in buying their Airbnb business but after looking at their mickey mouse prosposal.. it doesn't look like they make that much money. I guess I'll have to have my attorney put up the notices.. but now that we're near the end of the month, i'll wait until after I receive August rent to put up the notices.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,
Why, if you have a PM, are YOU now dealing with Rental Agreements and evictions? Who is named on the Agreements, you or your PM company? If you, the Tenants should have been notified of a "change in Management", and been dealing direct with the PM.
Of course, depending on Local Laws and the terms of your "Management" Agreement, maybe this is acceptable, but ours always state that we are contracted "To Manage" the described premises, so I would probably be firing you too. Sorry, I know that is not what you want to hear.
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
@Julie Chai the easiest thing is to list it with a realtor who also does PM, I am based in Houston, if you would like a run through my database let me know.
Why, if you have a PM, are YOU now dealing with Rental Agreements and evictions? Who is named on the Agreements, you or your PM company? If you, the Tenants should have been notified of a "change in Management", and been dealing direct with the PM.
Of course, depending on Local Laws and the terms of your "Management" Agreement, maybe this is acceptable, but ours always state that we are contracted "To Manage" the described premises, so I would probably be firing you too. Sorry, I know that is not what you want to hear.
Hi Richard, the lease is between the tenants and the owner (me) and I have an agreement with the PM. When I took over the property and lease, we transferred the management from the old PM to my new PM, which tenants have always been dealing directly with my PM the entire time.
If an owner has good reason to file an eviction on a tenant for lease violation, isn't the PM supposed to take instructions from the owner? They said they disagree with me, said "their" broker has not found any lease violations, and therefore wouldn't help me put up eviction notices because tenants are still paying rent. My attorney says I have a strong case and according to Texas Property Code, they beg to differ from the PM's reasoning also.
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
Investor · La Palma, CA · Member since 2021 · 71 posts · 19 votes
3y
Quote from @Account Closed:
@Julie Chai the easiest thing is to list it with a realtor who also does PM, I am based in Houston, if you would like a run through my database let me know.
I found this portal called Innago yesterday, that helps with all tenant screening, background checks, rent collection, etc. Basically, a DIY portal for owners for free. I was planning on using this portal until I find another PM to go with. I'll just need to ask my RE agent to help me showcase the place in person.
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
Did you ask the PM why they think the tenant isn't breaking the lease if the lease clearly states no Airbnb or VRBO? If you've had evictions before that the PM has helped you with, there are other problems. Evictions are not the norm and are rare, you shouldn't have to do multiple evictions. Covid causes some issues with non-payment of rent, but for most cases proper screening of tenants means that most people you get will follow the lease and not cause problems. There are exceptions with some types of property where they seem to attract problem tenants.
Just do the eviction with the person you've been talking to already and find a new PM.
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
There's more than we can possibly address here.
I would definitely get rid of the Tenants. If they cost you money because of excess utility use caused by an illegal sublease/sublet, then I would charge them for those losses.
I would also consider filing a claim with the PM if you have evidence they failed to enforce the lease and cost you money. Write them a demand letter and give them 30 days to pay/respond. If they don't, file a complaint with the State and see if that lights a fire.
Definitely start looking for a good PM.
Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
Did you ask the PM why they think the tenant isn't breaking the lease if the lease clearly states no Airbnb or VRBO? If you've had evictions before that the PM has helped you with, there are other problems. Evictions are not the norm and are rare, you shouldn't have to do multiple evictions. Covid causes some issues with non-payment of rent, but for most cases proper screening of tenants means that most people you get will follow the lease and not cause problems. There are exceptions with some types of property where they seem to attract problem tenants.
Just do the eviction with the person you've been talking to already and find a new PM.
Lease clearly states "No Airbnb/VRBO" but PM says the "special provisions" in the lease uses STR "language" such as, "tenant is allowed to host guests blah blah". My attorney says that is too general and STR "language" does not hold up in court. I have not experienced multiple evictions. We only had to "try to evict" one of the units for not paying a maintenance fee. Just ONE eviction, which we have cancelled because tenant finally agreed to pay it. I told my PM before that since they are not willing to renegotiate the rent and work with us, we were going to find any reason possible to get them out of there. I have been too kind and generous to these tenants, trying to be nice and work things out but now I've finally found some good grounds to get them out and PM does this to me.
I would definitely get rid of the Tenants. If they cost you money because of excess utility use caused by an illegal sublease/sublet, then I would charge them for those losses.
I would also consider filing a claim with the PM if you have evidence they failed to enforce the lease and cost you money. Write them a demand letter and give them 30 days to pay/respond. If they don't, file a complaint with the State and see if that lights a fire.
Definitely start looking for a good PM.
Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
Appreciate the information! There are very good points you mentioned and I definitely have missed some when I met this PM.
Sounds like you and your PMC are NOT on the same page:(
Recommend hiring a new PMC.
As to an attorney running a PMC - good luck.
My attorney spoke to my PM on the phone and he says there's a whole back story. I'll be talking with them today to see what's really going on... Now tenant is being aggressive and threatening to sue.
The other attorney I'm talking to will actually be partnering up with her broker friend and other RE qualified persons to create a new PM company, which she'll be overseeing the legal aspects of it. So far, she's been my rock in this case and very helpful guiding me through this.
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
I don't understand what about the fact they're doing VRBO/airbnb causes you to be negative?
We have almost 100 units we lease to people who do airbnb. We don't have a problem with it. They pay rent better than most tenants, take care of small work requests (per agreement) and we hold a fat deposit in case of default.
Houston, TX · Member since 2015 · 261 posts · 170 votes
3y
If you are in SoCal and your property is in Houston, get a reputable PM. There is no reason for you to have to do this work. Hopefully they will willingly surrender the property so you don't have to go through the eviction process. Try to find out if there are other landlords where your property is and see if they have PM in place, that knows the area and if knowledgeable with the typical tenant that may live there.
Property Manager · Modesto, CA · Member since 2014 · 17 posts · 4 votes
3y
There should only ever be one cook in the kitchen at a time.. not two. As a PM I've had to resign from some landlords (you call it quit, we call it firing the owner) where this was a challenge. Our agreement clearly states that direct communication between owner and tenant is a no-no and grounds for our automatic termination.
If you're going to hire someone to manage, let them manage. If you can't let someone manage, do it yourself.
But doing it yourself will be almost guaranteed to fail. The property management industry exists for a reason.
P.S. a SoCal attorney who knows someone in RE who knows someone else, who can get someone local to show the units, is the absolute wrong way to go about it. What you need is something like what @Nathan Gesner recommended: vet a quality management company that is local to the property.
And when you find them--let them take over and manage in all aspects. I promise.. it will work better that way.
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
I don't understand what about the fact they're doing VRBO/airbnb causes you to be negative?
We have almost 100 units we lease to people who do airbnb. We don't have a problem with it. They pay rent better than most tenants, take care of small work requests (per agreement) and we hold a fat deposit in case of default.
I'm at a negative because all utilities are included. Plus, I'm missing a security deposit from one of the units, and they security amount is less than their rent.
There should only ever be one cook in the kitchen at a time.. not two. As a PM I've had to resign from some landlords (you call it quit, we call it firing the owner) where this was a challenge. Our agreement clearly states that direct communication between owner and tenant is a no-no and grounds for our automatic termination.
If you're going to hire someone to manage, let them manage. If you can't let someone manage, do it yourself.
But doing it yourself will be almost guaranteed to fail. The property management industry exists for a reason.
P.S. a SoCal attorney who knows someone in RE who knows someone else, who can get someone local to show the units, is the absolute wrong way to go about it. What you need is something like what @Nathan Gesner recommended: vet a quality management company that is local to the property.
And when you find them--let them take over and manage in all aspects. I promise.. it will work better that way.
I never contacted the tenants myself... I don't know where you read that. I had my PM communicate with them the whole time and they "fired" me because they didn't want to get involved in the legal matters. My attorneys are located in TX, not in Socal... don't know where you got that from either lol.
I currently fired my attorneys because they suck at litigation and currently working with a new TEXAS attorney....evictions is now in the works.
Property Manager · Phoenix, AZ · Member since 2023 · 101 posts · 77 votes
3y
Lot of good discussion here. The only thing I can add that no one else has mentioned is to point out your alarming willingness to delay giving the cure notice until after October rent is paid. If you continue to accept rent payments, that would very likely be construed as approval of their behavior by the judge and you'll lose your eviction case. On the other hand, if you give notice, and they decide not to pay rent, then your eviction case just got a thousand times easier and you can file based solely on non-payment, rather than the more complicated breach of terms. You're staring down the barrel of having vacancy either way. Might as well get it over with...
There should only ever be one cook in the kitchen at a time.. not two. As a PM I've had to resign from some landlords (you call it quit, we call it firing the owner) where this was a challenge. Our agreement clearly states that direct communication between owner and tenant is a no-no and grounds for our automatic termination.
If you're going to hire someone to manage, let them manage. If you can't let someone manage, do it yourself.
But doing it yourself will be almost guaranteed to fail. The property management industry exists for a reason.
P.S. a SoCal attorney who knows someone in RE who knows someone else, who can get someone local to show the units, is the absolute wrong way to go about it. What you need is something like what @Nathan Gesner recommended: vet a quality management company that is local to the property.
And when you find them--let them take over and manage in all aspects. I promise.. it will work better that way.
I never contacted the tenants myself... I don't know where you read that. I had my PM communicate with them the whole time and they "fired" me because they didn't want to get involved in the legal matters. My attorneys are located in TX, not in Socal... don't know where you got that from either lol.
I currently fired my attorneys because they suck at litigation and currently working with a new TEXAS attorney....evictions is now in the works.
When you have this many professional vendors, I think you have to look at why so much turnover?
How are you vetting and hiring service professionals?
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
I don't understand what about the fact they're doing VRBO/airbnb causes you to be negative?
We have almost 100 units we lease to people who do airbnb. We don't have a problem with it. They pay rent better than most tenants, take care of small work requests (per agreement) and we hold a fat deposit in case of default.
I'm at a negative because all utilities are included. Plus, I'm missing a security deposit from one of the units, and they security amount is less than their rent.
Still confused. The security deposit size or missing has nothing to do with them doing STR. And I understand you might be negative because of high utility costs and having them baked into the rent -- but I'm not sure what them doing STR has to do with that?
I don't see why someone doing STR with their unit would have more utility bills? I don't have a way to measure STR vs. LTR but given STR units are normally only occupied 50-75% (guess) of the time, it would seem they'd use less water? Less AC?
I'd have kept them in and collected rent while I tried to work out this problem. Now you have an empty (or soon to be) property, no management, litigation, and it's 1000's of miles away. In a market that would make selling very difficult (esp empty).
You have someone lined up, let them do it. The fact that your tenants had an airBNB operating out of the rental against the terms of the lease and your current PM didn't do anything doesn't say much. When you found out, you should have told your PM to handle it-that is what you are paying them to do. I can't imagine anything harder than a PM having the owner working with tenants and not keeping the PM in the loop. You've already been doing things for the eviction, I'd just keep doing it.
I've always kept my PM in the loop and had them communicate with the tenants for me the entire time. I've never went behind them and try to talk to the tenant myself. Maybe I didn't explain it right in my original post.... but bottom line, PM just wants their money and don't want to do the hard work. PM helped me with evictions before with tenants refusing to pay maintenance bill, but because this time they don't agree that tenant is breaking the lease, they won't help me this time.
What would you do if in my position? Lease agreements includes utilities with rent, tenants pay rent on time but using it as an STR, putting you in a negative every month, lease states "No Airbnb or VRBO"
I don't understand what about the fact they're doing VRBO/airbnb causes you to be negative?
We have almost 100 units we lease to people who do airbnb. We don't have a problem with it. They pay rent better than most tenants, take care of small work requests (per agreement) and we hold a fat deposit in case of default.
I'm at a negative because all utilities are included. Plus, I'm missing a security deposit from one of the units, and they security amount is less than their rent.
Still confused. The security deposit size or missing has nothing to do with them doing STR. And I understand you might be negative because of high utility costs and having them baked into the rent -- but I'm not sure what them doing STR has to do with that?
I don't see why someone doing STR with their unit would have more utility bills? I don't have a way to measure STR vs. LTR but given STR units are normally only occupied 50-75% (guess) of the time, it would seem they'd use less water? Less AC?
I'd have kept them in and collected rent while I tried to work out this problem. Now you have an empty (or soon to be) property, no management, litigation, and it's 1000's of miles away. In a market that would make selling very difficult (esp empty).
I hope you get this all worked out.
In more simpler terms, guests from STR don't care about saving electricity or water because they're not paying for it.... same goes for hotel guests, right? LTR guests usually pay their own utilities so they are more prone to saving energy and water.
