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.
Financially, you don't want a "$90k duplex" as you say to erode into a $50k duplex because you didn't fix an issue. Water issues in a basement can be caused by a number of things:
a) Gutters clogged - easy fix
b) Improper grading around the building - more expensive fix but still not that complicated.
You could build the tenants some quick and dirty of the floor cabinets to use as basement storage and mandate that everything must be stored in the cabinets -- nothing spread around. That will tidy up the mess.
For $500/month rent each unit it certainly sounds like a low-income building.
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 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?
The city etc. often gets involved when tenants get a gripe about a landlord and call them in order to retaliate. I just had an experience with tenants of 5 1/2 years' duration who always paid on time, informed me whenever there were problems, and never gave me a moment's worry. Then I informed them that I was planning to sell the house in order to move away, and gave them 3 1/2 months to determine whether they could buy the house, as they had wanted to do so from the start. It took them 4 months to inform me they could not get a loan and then the fun really started. Among all the other nonsense, they reported my property to the City Building & Safety Dept., which came back with 4 very minor items. I believe they were hoping the Inspector would find a problem such as mold, giving them the basis for a lawsuit. Many tenants know that insurance companies hand out easy settlement money even for frivolous cases, and it's all too easy for them to find some shyster lawyer to represent them...just ask me, as that also happened to me just last year. Don't want to scare anyone, but these are the facts.
@James W. take care of your rental as if you lived there. Make your repairs that need fixing and make updates to your rentals. We should never be judgmental of our renters, as they pay our mortage(s) on our investment properties, and build our wealth.
Hope this helps.
Gutters, a shop-vac and a fan (to just leave with them). Next!
In any case, yes you do have a legal obligation to fix water leaks , anything that can contribute to or become a health issue. You must maintain your property as an owner in good condition. I would say yes fix any and all problems with the property itself , meaning the building with tenants.
Texas has a state supported real eatae research center that publishes a landlod tenant guide written by their attorney. If your state doesn't you shoyld buy the Nolo guide. With as many units as you have, you need factual answers...this place is an opinion board and some people have opinions about everything.
We arguably need "slumlords" as not everyone can afford a nice place--and some people would rather live in a shabby old building and pay less-- (and some live in a shabby old building and pay more because they are risky tenants) .....but nationwide rental housing has to meet minimum standards. And you probably are at risk of a lawsuit or condemnation if the situation meets certain criteria.
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?
If the tenants or one of their nosey friends reports the property to the city or health department then it will be a huge headache for you. If MOLD makes it to public record, good luck getting all of your $$$ back anytime soon. @Dumitru Anton makes a great point on how to start. Add a good deep cleaning after the repairs and maybe the tenants will appreciate your pro-activeness and reciprocate by keeping the basement clean. I have seen many basements like this in MF and a couple coats of sealer and gutters/proper drainage work wonders when it comes to wet basements.
Good Luck!
@Dawn Anastasi great suggestion with the cabinets. Habitat for Humanity or local construction recycling warehouses are a great source for super cheap used kitchen cabinetry/counters that I have used in basement laundry areas.
You may not "legally" need to take care of the water issue but you could end up in my situation.
Tenant gets a mold test done and finds mold in the air. Decides to stop paying rent. You try to evict the tenant on the grounds of non-payment. They claim retaliation, counter claims health issues because of mold and requests a jury trial. So now 5 months later with at least 2 more to go, you are out 5 months of rent, $7,000 in legal bills (and counting-we are not even at trial at this point) and by the way, if the tenant wins their case, the insurance company probably will not cover the judgement as it is excluded in the policy.
Also, if the tenant decides to call code enforcement and they find mold, now you have to remediate professionally (again not covered by insurance) and it will cost you about $15,000 or more because they have to do the whole building to kill all the mold.
Oh, and by the way, the tenant called code enforcement and there is no visual mold but all this is going on anyway.
So legally, you may not have to but it will cost you a lot of money when you get a tenant who can play the system.
Make the attempt to fix it so you can say you did.
Tom
I suppose if you have really terrible people as tenants finding any way to not pay rent, they could do what's happened to @Thomas Guertin. However, know the rental laws of your area!
For example, in Baltimore, if a tenant has a complaint about a serious repair that affects health and well-being, they must take it to court. And they must continue paying rent to the escrow that court sets up! So it's not that they don't pay rent...they just don't pay it to you until the situation is remedied. Then the money in escrow is released to you. But unless they have this legal procedure in place, they can't just say they won't pay rent. It's not that simple.
@James W. Is it just the pile of clothes that have mildew/mold? If so, I'd recommend they take care of it, and then document it, and file it for later so you can show the conversation.
If it's more than just the clothes - I can't speak to your obligation at this moment, but you'll certainly have one later if the tenant raises mold concerns. Keep in mind that this tenant may not care, and may seem laid back, but one family member, friend, cable guy, etc may raise a concern to them, and start them on a whole new path of behavior concerning the mold issue. If it's me, I'd find want to find a way to address what's causing it (leaks, gutter issues?) and then look toward addressing it economically.
You are responsible for maintaining safe and healthy living conditions for whomever is living in your property. The water in the house is not conducive to safety and health, and it behooves you to take steps to stop the inflow.
What's more, it's quite possibly a cheap and easy adjustment of the gutters, or filling a crack in the concrete outside that is conducting the water into the building.
Whatever you think about the tenant's personal habits, letting that water continue to leak in, you leave yourself vulnerable in any dispute with the tenant, however unrelated. The tenant can show that you've been a negligent landlord. Doing nothing adds to the tenant's potential arsenal against you, in a liability lawsuit or rent-related legal proceeding.
One more element of self interest: water problems never fix themselves. They only get worse. Take care of it now or else you'll probably be dealing with something more expensive later on.
Fix the problem for your own wellbeing, if not for the tenant's.
Good luck,
Nancy Roth
If you cannot fix the water issue in the basement perhaps the easiest fix is to not offer the basement use as common area for the building.
If it is a stone foundation you might never truly fix the leak. Keeping the organic items that can mold out of the basement is then important.
Or disallow them to leave things in the basement because its shared space?
What I do has nothing to do with the life-style the tenants live. I decide what my standards are and stick to them.
I do maintence on properties of high-end slum-lords, middle-class slum-lords and lower-class slum-lords. The section of town that the home is in has nothing to do with being a slum=lord. It is the way you treat your tenants and the property.
Well, if I could edit the Topic Title I might... lesson learned.
I don't consider myself a "slumlord". I was using the term facetiously in order to get attention in order to get experienced advice on some issues I have(had) with some new properties, as a new landlord.
Also FWIW I've stuck more money into fixing the properties up in the last 5 months than the previous landlords did in the last 10 years, and I haven't raised rent either. I've eliminated 65% of my water problems (mostly thanks to the rare useful comment here, none of which come as a result of some pompous prick talking down to me on the internet), I've made the properties much nicer for the tenants, and increased the property value in the process.
If you cannot fix the water issue in the basement perhaps the easiest fix is to not offer the basement use as common area for the building.
If it is a stone foundation you might never truly fix the leak. Keeping the organic items that can mold out of the basement is then important.
Or disallow them to leave things in the basement because its shared space?
That's one of the better posts here. Thanks for looking past the snarky Topic Title and giving some legitimately good feedback. One of the properties that I'm still having problems with is an old farmhouse, and that might end up being the best solution for that property.
@James W. If you don't mind what was the solution you used to fix the water issue or which comment was it that led you to a solution? Can't feed the trolls though they won't understand the wit and intent of your title.
There must be some middle ground between selling and razing. You didn't post pics but it doesn't sound like the mold or water issue is too severe. If that's the case a good contractor can replace moldy materials, treat the rest, and apply mold preventative coverings/sealants to the treated area. They can also put in a drain & pump, and waterproof the rest of the affected area (it sounds like a basement?) slab & masonry walls. Don't know if there's a crawlspace but you could look into a conditioned crawl space or vapor barrier as well - we have a lot of crawls here and a good vapor barrier has helped to dry out a lot of the subfloor and reduce humidity throughout the whole house. I've received quotes from the dedicated waterproofing companies and they were astronomical in my opinion for what it is. CrawlSpace Depot has a 5-part vapor barrier installation series on YouTube that is very helpful, after watching it any skilled-laborer can achieve the install. To achieve a fully conditioned crawlspace is just a tad more complex but is easily doable by anyone who studies- it's basically deleting any ventilation ingress/egress from the crawlspace, adding insulation to the walls, deleting insulation from the joists, installing a vapor barrier on the ground & walls, and installing a tiny air exchanger that will force air periodically from the conditioned main house into the crawl.
Hopefully some of this will help somebody. Unless the foundation or walls are actually failing (didn't sound like they were) there will be a good fix that won't result in having to tear it down or sell it.
I am curious to know how you fixed it.
Hey @Brandt Tingen - I took a couple of the suggestions made here.
1. A few yards of dirt to fix the grade, getting everything pitched away from the buildings was one of the most important items. In the spring I'll add some more dirt and either grass seed or landscape stone to finish it.
2. Gutters - replaced some, extended some, just worked to get the water further from the building.
3. One of the buildings had some severe cracks between the sidewalk and the foundation wall. This was filled with some kind of concrete patch material, and seems to be diverting enough of the water to keep it out of the basement.
The 4th building was a bit more distressed than the others. Side by side duplex with a sump on one side only, and no drain tile that I found. The walls are being pushed in from expansion of the clay ground. Like you, I found the estimates to be astronomical - one company wanted $30,000 to repair!
I ended up hiring a concrete company to cut out 6" of concrete around the entire perimeter, install drain tile and a sump pump on the other side. That ran about $4000. If the walls continue to come in due to expansion of the ground outside, I'll reinforce the walls from the inside-out for another $6000 in steel, wood, and labor. All in, I'll be done with the basement for a little over $10,000.