Hey BP!
Say you have a duplex that you paid $60k for.
Rental income is $1000/month. ($500 upper / $500 lower), property taxes ~2500, insurance ~$600, no major expenses on my end, utilities all in tenants name.
Basement has water issues and foundation issues. Lower tenant is a slob, has clothes piled and molding. Upper tenant is smoking in the unit, also a slob.
Both rents are paid on time, they have no intention of moving.
Do you do anything to fix the water issue, considering the tenants don't care? Do I have a legal obligation to advise them maybe it's not a good idea to live that way? Do I have a legal obligation to fix the water issue?
The property obviously cash flows, so I'm torn between just ignoring it and keep collecting the rent... speaking up and giving them a pep talk (which is a waste of my time)... or putting it up on the market and letting some other heartless bastard worry about it.
Did you advertise it as including an "in door" swimming pool? I think you're missing some cashflow if you didn't.
Do you like being sued? Just wait until someone gets sick from the mold problem caused by a water leak that you chose not to fix...
I wouldn't worry too much about the smoker in the upper unit. The damage to the unit has already been done. If you're happy with that cashflow, then let it go.
The lower unit is definitely an issue. I would fix the water and mold issues. If you can do so without displacing the tenant, that would be ideal. If not, and the neighborhood supports it, I'd fix that and then do a complete refresh and see if you can rent it at a higher amount.
Protect your investment and fix the water and foundation problems.
You are the landlord and need to lead the way, meaning if you don't care for or about your property why would your tenants?
Hey BP!
Say you have a duplex that you paid $60k for.
Rental income is $1000/month. ($500 upper / $500 lower), property taxes ~2500, insurance ~$600, no major expenses on my end, utilities all in tenants name.
Basement has water issues and foundation issues. Lower tenant is a slob, has clothes piled and molding. Upper tenant is smoking in the unit, also a slob.
Both rents are paid on time, they have no intention of moving.
Do you do anything to fix the water issue, considering the tenants don't care? Do I have a legal obligation to advise them maybe it's not a good idea to live that way? Do I have a legal obligation to fix the water issue?
The property obviously cash flows, so I'm torn between just ignoring it and keep collecting the rent... speaking up and giving them a pep talk (which is a waste of my time)... or putting it up on the market and letting some other heartless bastard worry about it.
Problems will only get worse, not better. The problems (as I see them) are:
1. Lack of proper maintenance
2. Poor tenant selection
These can both be addressed by YOU! Start by fixing things that are wrong (ex. water leak and any damage), then get firm with the tenants and either straighten them out or kick them out if they're not interested. If you've got a slob in one unit and an inside smoker in the other, then you'll have a hard time attracting good tenants when one or the other moves out.
If you don't want to fix the problems, then you should expect them to get worse. The property may cashflow fine and in it's current state maybe you can even get your initial $60K back if you sell today. If you continue to just sit back and ignore the issues, then I wouldn't count on getting $60K once you get to the point where you can't take it anymore and have to sell.
Before anyone starts judging (not that I care :P)... I just purchased this one along with 10 others, and these are some of the problems that were handed to me. I've had the properties for about a month now and I've already fixed more in that time than the last owners did in 5 years.
I've still got an easy $100,000 worth of issues to decide what to do with.
MY kneejerk reaction is to fix everything right, but that's not always possible or the right way to be an investor.
Continue, please...
I wouldn't worry too much about the smoker in the upper unit. The damage to the unit has already been done. If you're happy with that cashflow, then let it go.
The lower unit is definitely an issue. I would fix the water and mold issues. If you can do so without displacing the tenant, that would be ideal. If not, and the neighborhood supports it, I'd fix that and then do a complete refresh and see if you can rent it at a higher amount.
Thank you for the constructive feedback Linda :)
Do you like being sued? Just wait until someone gets sick from the mold problem caused by a water leak that you chose not to fix...
The mold is actually caused by the tenant leaving their clothes in a place that they knew water collects when there is heavy rain.
It's not my job to clean their mess.
This particular duplex is almost 100 years old and fixing the foundation and leaks may end up costing more than just razing the place and rebuilding.
With that said... I'm well aware that I could be sued for anything, by anyone, at any time.
My question is do I have a legal obligation to fix it? If so, I may want to just dump the property - there are plenty of people out there that are far more capable than I to handle something like this.
Thanks for the comment :)
Do you like being sued? Just wait until someone gets sick from the mold problem caused by a water leak that you chose not to fix...
The mold is actually caused by the tenant leaving their clothes in a place that they knew water collects when there is heavy rain.
It's not my job to clean their mess.
This particular duplex is almost 100 years old and fixing the foundation and leaks may end up costing more than just razing the place and rebuilding.
With that said... I'm well aware that I could be sued for anything, by anyone, at any time.
My question is do I have a legal obligation to fix it? If so, I may want to just dump the property - there are plenty of people out there that are far more capable than I to handle something like this.
Thanks for the comment :)
Clothes on the floor do not grow mold on their own. The issue is there is water leaking through the walls into living space. It'd be one thing if this were just a basement and not someone's bedroom. You're aware of the problem and aware of what it's causing, I'd say you'd have an obligation to fix it since it's a safety issue. Even if there weren't clothes on the ground you'd still have a moisture problem in the unit. If you can't afford to (or are unwilling to) fix the issues that impact the health and safety of the tenants then you shouldn't have bought the property.
Hey BP!
Say you have a duplex that you paid $60k for.
Rental income is $1000/month. ($500 upper / $500 lower), property taxes ~2500, insurance ~$600, no major expenses on my end, utilities all in tenants name.
Basement has water issues and foundation issues. Lower tenant is a slob, has clothes piled and molding. Upper tenant is smoking in the unit, also a slob.
Both rents are paid on time, they have no intention of moving.
Do you do anything to fix the water issue, considering the tenants don't care? Do I have a legal obligation to advise them maybe it's not a good idea to live that way? Do I have a legal obligation to fix the water issue?
The property obviously cash flows, so I'm torn between just ignoring it and keep collecting the rent... speaking up and giving them a pep talk (which is a waste of my time)... or putting it up on the market and letting some other heartless bastard worry about it.
Problems will only get worse, not better. The problems (as I see them) are:
1. Lack of proper maintenance
2. Poor tenant selection
These can both be addressed by YOU! Start by fixing things that are wrong (ex. water leak and any damage), then get firm with the tenants and either straighten them out or kick them out if they're not interested. If you've got a slob in one unit and an inside smoker in the other, then you'll have a hard time attracting good tenants when one or the other moves out.
If you don't want to fix the problems, then you should expect them to get worse. The property may cashflow fine and in it's current state maybe you can even get your initial $60K back if you sell today. If you continue to just sit back and ignore the issues, then I wouldn't count on getting $60K once you get to the point where you can't take it anymore and have to sell.
You are correct on 1 and 2. Neither are my fault, but nonetheless - you are correct.
Luckily for me, the property is worth more than 60k so I'm not terribly concerned about losing money on the investment at this time... I'm just trying to determine how I want to proceed.
Thanks for the feedback. :)
Do you like being sued? Just wait until someone gets sick from the mold problem caused by a water leak that you chose not to fix...
The mold is actually caused by the tenant leaving their clothes in a place that they knew water collects when there is heavy rain.
It's not my job to clean their mess.
This particular duplex is almost 100 years old and fixing the foundation and leaks may end up costing more than just razing the place and rebuilding.
With that said... I'm well aware that I could be sued for anything, by anyone, at any time.
My question is do I have a legal obligation to fix it? If so, I may want to just dump the property - there are plenty of people out there that are far more capable than I to handle something like this.
Thanks for the comment :)
Clothes on the floor do not grow mold on their own. The issue is there is water leaking through the walls into living space. It'd be one thing if this were just a basement and not someone's bedroom. You're aware of the problem and aware of what it's causing, I'd say you'd have an obligation to fix it since it's a safety issue. Even if there weren't clothes on the ground you'd still have a moisture problem in the unit. If you can't afford to (or are unwilling to) fix the issues that impact the health and safety of the tenants then you shouldn't have bought the property.
It is just a basement, not a bedroom. The laundry hookups are down there. Not sure why you assumed it was living space, but I apologize for not specifying.
Definitely fix the water and mold now or it could be a way more expensive issue later, and you don't want city people and permits and legal/local governement stuff involved. Just fix the issues
Did you advertise it as including an "in door" swimming pool? I think you're missing some cashflow if you didn't.
Hey BP!
Say you have a duplex that you paid $60k for.
Rental income is $1000/month. ($500 upper / $500 lower), property taxes ~2500, insurance ~$600, no major expenses on my end, utilities all in tenants name.
Basement has water issues and foundation issues. Lower tenant is a slob, has clothes piled and molding. Upper tenant is smoking in the unit, also a slob.
Both rents are paid on time, they have no intention of moving.
Do you do anything to fix the water issue, considering the tenants don't care? Do I have a legal obligation to advise them maybe it's not a good idea to live that way? Do I have a legal obligation to fix the water issue?
The property obviously cash flows, so I'm torn between just ignoring it and keep collecting the rent... speaking up and giving them a pep talk (which is a waste of my time)... or putting it up on the market and letting some other heartless bastard worry about it.
@James W. ,
I had a similar issue on a 100 years old house too.
in my case i resolved by improving a badly designed/implemented gutter system (all the rain water was just dumping over the walls, soaking into them then getting into the basement) and diverting that water away from the house. 2xprimer + 2x good paint.
maybe this is the case here.
if you don't want the hassle of getting rid of the existing tenants, vacancy and finding other (hopefully) better suited tenants, maybe first you can just paint the place inside and outside and resolve any safety issues (rails). what did you repair to the place?
look for the "how to harden my rentals" threads here for some ideas.
and don't worry about all the flak here: your heart is in the right place (you started to repair the place versus none with former owners and you asked a question here; slumlord would not even bother....), we are providing quality affordable housing and proud of that.
This property/situation is just one of many that I have as part of this whole deal (I bought a portfolio). My intent is to fix what I can, if it is reasonable. Provide adequate housing for people in the process, and then move on to other properties in 3-5 years. It doesn't make sense for me to stick $40k into a $90k property that I paid $60k for, so I can sell it in 4 years and see a $5k profit.
Again, everyone, my question is this:
Do I have a legal obligation to advise them maybe it's not a good idea to live that way (leaving clothes on a wet floor)? And do I have a legal obligation to fix the water issue?
Originally posted by @Ryan Dossey:
Did you advertise it as including an "in door" swimming pool? I think you're missing some cashflow if you didn't.
LMAO
You're the kind of guy I'd do business with :D
@Dumitru Anton it does appear that a lot could be alleviated with a better gutter system and also a sump pump. Thanks for the comment about the flak - I've got thick skin, no worries there. :)
@Vincent Crane your comment about city/permits/etc - the tenants aren't Section 8. I have reason to believe that they knew about the water issues before they moved in. With that in mind - how does the city/govt/etc get involved in this kind of situation?
I know what you mean about some moisture coming into the unfinished basement during *heavy* rains. A lot of these old properties just can't handle downpours too well. It's not that the basement is flooding, but during a real heavy rain, you'll likely see some moisture along the wall perimeters.
As someone mentioned, it does help a little bit to extend the downspouts further from the building. Could also maybe add some grading away from the building to see if that helps during downpours.
Is this what you mean by your water and foundation issues? If so, I'm willing to bet most of the neighboring properties have the same issue. You could dump your money into "waterproofing" the foundation, but that's probably your choice. Unless that basement becomes a swimming pool (rather than just a little seepage during downpours), I doubt you're obligated to remedy that.
As for mold because of the clothes pile near the moisture....is it not really just mildew?
Is the tenant complaining and/or threatening you about it?
what type of water issues and foundation issues? how bad is it? have you got any picts?
Do I have a legal obligation to advise them ...
I'm not a lawyer. If you want nothing but legal advice regarding that situation, you should consult a lawyer. One hour's time might cost you $100-$200, but I think it would be well worth the cost.
Speaking as a landlord who is not a lawyer, I would, at the very least, determine why the property has a water problem. You mention a possible "$40,000" cost as the reason why you don't want to resolve the problem. Yet, you admit you have no idea why the basement keeps gathering water.
I bought a house a couple of years ago that kept getting water in the crawlspace. I wondered and worried if the problem was going to cost me thousands (or even tens of thousands) of dollars. After asking a few people "in the know", including a city inspector, I attempted the easiest, cheapest fix. Some gutter downspouts went directly underground beside the foundation, presumably to underground drains) and the others were splashing on the ground beside the foundation. I spent $40 buying splash guards and flexible gutter extensions and in less than 30 minutes, I installed them. I cut the old extensions leading into the ground, and led all the gutter extensions two feet away from the house, or onto splash guards. Since then, the crawlspace is as dry as the inside of the house.
The point is, you owe it to your tenants, and yourself, to at least find out what the problem is. Pay a professional a hundred bucks to take a look at it. Or, try the cheap downspout fix. If the building does not have gutters, install them.
The duplex is worth $90K. You already have a $30K profit in the building. Do you want to see it just erode away because you were too lazy to at least find out what the problem is?
Congratulations on the recent purchases. Good luck.
Did you advertise it as including an "in door" swimming pool? I think you're missing some cashflow if you didn't.
James, would start on leak and take it from there. Thx
Your legal obligations lie in what the local code enforcement office has to say about this. Further, there are minimum habitability standards set by your state's Board of Health and maybe even the local code enforcement office. If the condition worsens, you're duplex may even be declared "condemned."
Have some pros look at it and give you some free estimates.
Hi James,
Given the situation, I would first try to identify where the problem truly lies- is it indeed the foundation, or is it just bad drainage? We have 2 rental properties with basements that get wet on occasion, sometimes this is just the nature of a basement and can vary greatly from house to house. A friend of mine had a water seepage into her basement living area every time we had heavy rains, when I took a look at it I noticed the gutters were packed full and water was running toward the house instead of away. She got the gutters cleaned out and didn't have an issue the next time we had a big rain.
We have a clause in our lease that reads "The basement may get wet on occasion, please store belongings off of the floor." Maybe you could make a similar suggestion to the guy leaving his clothes in a moldy pile or just post a sign? Perhaps just put a table there for him to put the pile on? Position it slightly away from the wall if the water is seeping there. Obviously, this would only be for the minor seepage and wouldn't address a leak that is weakening the foundation or causing larger issues.
Congrats on your purchases!
Kelly
There were a lot of great tips about gutters and grading.
You should figure out the source of the water. It may be a $4000 fix or a $40 fix. I had/have basement problems and my main problem is having the lowest point that the water running downhill hits. Cleaning out the gutters and making sure the water ran away from the house cut down on the number of times I had water get into the basement. Sump pump and several french drains further helped. But then the exterior basement door failed during a heavy downpour.....
Part of me is wondering if a dehumidifier would help. The tenant would have to pay the electricity it uses, but it does suck up the moisture that basements seem to attract if you set it at 55-65%.
You need to fix the basement problems or you may have more problems than you will care to have. One or more lawsuits and the longer you wait to fix the problem it will likely become more expensive to fix.
Did you advertise it as including an "in door" swimming pool? I think you're missing some cashflow if you didn't.
Good one, Ryan!