How to legally SUBLEASE a month-to-month without contract
Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes
How to legally SUBLEASE a month-to-month without contract
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
9y"I'm worried that if I tell you he would get greedy..."
"I'm worried that if I tell him he would get greedy..."
Hypocritical much?
It would be acceptable if you did it with the owner's knowledge but you're talking about doing it behind his back. Based on what you've written, I would categorize this as theft.
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- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes9y
"I'm worried that if I tell you he would get greedy..."
"I'm worried that if I tell him he would get greedy..."
Hypocritical much?
It would be acceptable if you did it with the owner's knowledge but you're talking about doing it behind his back. Based on what you've written, I would categorize this as theft.
The DIY Landlord Book4.7248 Reviews - Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Nathan Gesner:
"I'm worried that if I tell you he would get greedy..."
"I'm worried that if I tell him he would get greedy..."
Hypocritical much?
It would be acceptable if you did it with the owner's knowledge but you're talking about doing it behind his back. Based on what you've written, I would categorize this as theft
obviously there are some details and history missing, like I rehabbed the place for him and he doesn't even know. And I am talking about a lot of money out of my pocket, and I did it to help him because he was having problem and he was depressed and I didn't want to be part of it. So I just decided to help him out and he is probably never going to know.
I am not asking for philosophical or moral lesson in this post, I would have specified otherwise.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes9y
@Francesco Barbati Your original question was, "How do I do this legally?"
My answer: gain approval from the Landlord, preferably in writing. Verbal agreements in the State of Florida are legally binding and equally enforceable as written agreements. The Landlord authorized you to reside in the unit. He did not authorize you to add more tenants, sublease, etc. Legally, you should notify him of any changes you intend to make to the original agreement. This would include "rehabbing" his rental.
The next time you want to know what is legal without personal opinion, talk to an attorney. When you post on a public forum, you are asking for public opinion. This opinion may include the observation that you appear to have a sense of entitlement and a basic misunderstanding of legality and morality.
The DIY Landlord Book4.7248 Reviews - Member since 2016 · 13k+ posts · 12k+ votes9y
History is irrelevant, your voluntary costs irrelevant.
Talk to the landlord and get his permission in writing to sublet. If he agrees you continue to pay him the rent he wants and it is irrelevant what you charge the sublease tenant. This sort of situation is common when tenants have permission to bring in a room mate. As long as the landlord approves what a tenant charges is only their business. In your situation you remain the tenant and will be responsible for the sublease.
As for taxes you should be claiming the income and deducting your costs but realistically who would bother.
You must keep in mind that being your sublease tenants landlord makes you responsible to know the law. Any problems and you are legally on the hook. If a bad tenant does damage or needs to be evicted it is on your dime.
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Nathan Gesner:
@Francesco Barbati Your original question was, "How do I do this legally?"
My answer: gain approval from the Landlord, preferably in writing. Verbal agreements in the State of Florida are legally binding and equally enforceable as written agreements. The Landlord authorized you to reside in the unit. He did not authorize you to add more tenants, sublease, etc. Legally, you should notify him of any changes you intend to make to the original agreement. This would include "rehabbing" his rental.
The next time you want to know what is legal without personal opinion, talk to an attorney. When you post on a public forum, you are asking for public opinion. This opinion may include the observation that you appear to have a sense of entitlement and a basic misunderstanding of legality and morality.
I absolutely agree, but I when I was writing the post I was in a rush! My bad.
Also he knows that I am going to rent the place out for him, so he doesn't have to fly here in Florida from California and he thanked me of course. So he authorized me just to be clear. I did notify him, but everything is verbal so your post is extremely helpful! Thanks!
I should probably rewrite the post with all the info also...
- Member since 2016 · 13k+ posts · 12k+ votes9y
"Also he knows that I am going to rent the place out for him,"
This statement has you on a entirely different footing. Either you are renting the place out for him or you are subletting the place. Legally 180 degrees apart.
If you are finding a new tenant, charge him a higher rent and skimming off the top that would be illegal.
Why would he agree to allow you to sublet rather than simply finding a new tenant. It sounds very much like you are being deceptive in which case you could easily end up in court.
Sounds dishonest to me.
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Thomas S.:
"Also he knows that I am going to rent the place out for him,"
This statement has you on a entirely different footing. Either you are renting the place out for him or you are subletting the place. Legally 180 degrees apart.
If you are finding a new tenant, charge him a higher rent and skimming off the top that would be illegal.
Why would he agree to allow you to sublet rather than simply finding a new tenant. It sounds very much like you are being deceptive in which case you could easily end up in court.
Sounds dishonest to me.
Thank you very much for your explanation! I was using "subleasing" and "renting for" interchangeably, and to define the same activity. No I understand all the misunderstanding.
I am aware that I take all the risks and responsibilities subleasing and I am ok with that, and that is why I though that charging a bit more "for my services and time" was a fair thing to do and I was not feeling dishonest or deceptive, and also I didn't want to be taken advantage of (like is has happened already).
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes9y
Tax-wise, any sub-letting profit in your pocket MUST be declared, right? Well, you asked...
[But, I don't actually know if there's any income that need not be declared. Tax Agents do!]
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Brent Coombs:
Tax-wise, any sub-letting profit in your pocket MUST be declared, right? Well, you asked...
[But, I don't actually know if there's any income that need not be declared. Tax Agents do!]
Seems obvious to me too, it has never been a doubt. Actually I don't understand why people don't pay taxes. The risk/reward output never makes sense, it is a signal of financial ignorance and it is bad karma.
- Lowell, MA · Member since 2014 · 260 posts · 99 votes9ySo what you're saying is someone has been nice enough to rent you an apartment at below market rate and now you want to take advantage of their kindness? Scumbag
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Robert Nason:
So what you're saying is someone has been nice enough to rent you an apartment at below market rate and now you want to take advantage of their kindness? Scumbag
Why? Do you really have no higher and better use for you time? At least read all the story before sharing such an opinion...
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
@Francesco Barbati Sounds like a lot of risk for you to shoulder if you want to do this properly. If you lease from him, and someone else leases from you, YOU owe the rent to the owner every month irregardless of if your tenant pays you. What's the spread between what you pay and what you can rent it for? Could you just place the tenant for the owner and have him pay you that spread or slightly less based upon a year lease?
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Matthew Olszak:
@Francesco Barbati Sounds like a lot of risk for you to shoulder if you want to do this properly. If you lease from him, and someone else leases from you, YOU owe the rent to the owner every month irregardless of if your tenant pays you. What's the spread between what you pay and what you can rent it for? Could you just place the tenant for the owner and have him pay you that spread or slightly less based upon a year lease?
That actually is a very good point that I didn't consider. I pay $1,000/m and I believe I could realistically sublease it for $1,100-1,250/m. How would you calculate the risk? Do you think it would be worth it?
Not a bad idea, but at that point would I be like a property manager? I don't have a real estate license so I am not sure I can be a property manager legally in Florida.
- Lowell, MA · Member since 2014 · 260 posts · 99 votes9y
I did read your entire post and I come to the same conclusion. You are a scum bag. When you said you were totally renovated his apartment and he doesn't even know about it. I would have you in court so fast your head would spin. And when you ask questions in the open forum expect the good bad and the ugly. If you want legal advise consult an attorney.
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Robert Nason:
I did read your entire post and I come to the same conclusion. You are a scum bag. When you said you were totally renovated his apartment and he doesn't even know about it. I would have you in court so fast your head would spin. And when you ask questions in the open forum expect the good bad and the ugly. If you want legal advise consult an attorney.
And scumbag be, if it makes you happy man and it doesn't hurt anyone, feel free.
Anyway, did you really think this through? What do you know about me to have such a strong judgment. A couple of online forum posts? I definitely take some responsibilities for not being able to convey clearly my situation and also for not taking the time to disclose all the details and only the necessary infos, but I didn't not think people would heat up so easily for basically nothing here. I apologize and I'll try to be more detailed in next time!
Peace out Robert!
- Lowell, MA · Member since 2014 · 260 posts · 99 votes9y
I think it's your betrayal of someone who's done something very nice for you that is upsetting people
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Robert Nason:
I think it's your betrayal of someone who's done something very nice for you that is upsetting people
Wait a second! Who do you think was doing something very nice to who?
I would expect experienced investors been able to read between the lines, but I was wrong again.
The fact that I was renting below market value does not mean that I was renting below the "rentable" value of the place, and the fact that I was rehabbing it myself should have been a clear indication of that. He would have never been able to rent that place, and it would have kept not being able to pay the HOA (and subsequently risking to lose the place) and get in more trouble. Since it was obviously conveniente more me also to move there, and not only financially but for family reasons, I said ok, let's help each other out (I am very humble and frugal and don't need to live in mansion) and at the end it turned out that I was helping him more that the other way around and keep in mind this is only a part of the whole story. I have also paid rent much earlier when he need it.
I would expect seasoned investors and mature folks not to just read a couple of line, get emotional like teens and spew opinions or insult some one they don't even know, but on the other hand I admit I completely failed in telling the story, conveying a message, and asking the right questions so I apologize again and I thank every one for his time and critics, and I also apologize for pissing people off.
I should probably take more time think thoroughly before posting, but circumstances don't always help.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
@Francesco Barbati Don't take this post the wrong way. Personally, just for this reason, I ALWAYS have tenants, employees, etc charge me for work performed. Early on, in a different industry, I'd have to fire someone and then I'd get an earful about how they didn't take lunch, they didn't charge me for this and that, etc. And that was the justification for them working on the side with my clients - their $500 worth of "time" or "work" to me costing me $1000s in lost revenue and liability. Hence why any employee of mine absolutely must take their 30min lunch per law irregardless of if they are hungry or not - when things go sour those times always seep out of the woodwork.
This relates to you because I feel like you are justifying something you know is wrong - shafting the rent from your friend by saying you deserve it because you did so much to improve the unit. What would have been the right way to do things would have been to come to an agreement that for $100 reduction in rent over the course of a year, you'll perform X improvements.
I've rented apartments before to friends at less than market rate. I did that because I wanted to help MY FRIEND. Help them to save money, help them to get on their feet, help them to have an apartment to live in that they can be proud of. I was thankful of the opportunities provided to me to be able to do so and wanted to pass it along. If I found out they took advantage of that and re-rented it for more, I'd be pissed. If they fixed it up, I'd expect to discuss beforehand and pay accordingly. But never would I be OK with a friend going behind my back and making money off MY investment without my knowledge.
If you want to do this right, come clean and get the OK from the owner.
- Real Estate Professional · Boca Raton, FL · Member since 2016 · 116 posts · 17 votes9y
Originally posted by @Matthew Olszak:
@Francesco Barbati Don't take this post the wrong way. Personally, just for this reason, I ALWAYS have tenants, employees, etc charge me for work performed. Early on, in a different industry, I'd have to fire someone and then I'd get an earful about how they didn't take lunch, they didn't charge me for this and that, etc. And that was the justification for them working on the side with my clients - their $500 worth of "time" or "work" to me costing me $1000s in lost revenue and liability. Hence why any employee of mine absolutely must take their 30min lunch per law irregardless of if they are hungry or not - when things go sour those times always seep out of the woodwork.
This relates to you because I feel like you are justifying something you know is wrong - shafting the rent from your friend by saying you deserve it because you did so much to improve the unit. What would have been the right way to do things would have been to come to an agreement that for $100 reduction in rent over the course of a year, you'll perform X improvements.
I've rented apartments before to friends at less than market rate. I did that because I wanted to help MY FRIEND. Help them to save money, help them to get on their feet, help them to have an apartment to live in that they can be proud of. I was thankful of the opportunities provided to me to be able to do so and wanted to pass it along. If I found out they took advantage of that and re-rented it for more, I'd be pissed. If they fixed it up, I'd expect to discuss beforehand and pay accordingly. But never would I be OK with a friend going behind my back and making money off MY investment without my knowledge.
If you want to do this right, come clean and get the OK from the owner.
How could I possibly take this post the wrong way? You are super clear and I agree with everything you said, and it could partially be applied to my situation as well.
Anyway I got the OK from the owner already and I am pretty sure I said that in a previous post. What I need is the OK in writing.
Why do you (and everyone else reading this post) think I was going behind his back? Because I was planning on subleasing it for higher than the original rent? Is that not a common practice??
- Oshkosh, Wisconsin house · Member since 2017 · 6 posts · 1 vote9yinstead of trying to sublease it, why don't you try and buy it? sounds like the owner might be motivated. He's out a of state, rents are below market and sounds like the property needed some repairs. Maybe you could lease option or sub2 the property.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
Originally posted by @Francesco Barbati:
Why do you (and everyone else reading this post) think I was going behind his back? Because I was planning on subleasing it for higher than the original rent? Is that not a common practice??
Because you started off that you wanted a way for him to not know you were doing this. Then when we told you that is wrong, you tried to justify it because you've made improvements to the property. My point was that if you made improvements to the property, that's a separate deal from your rent and you should've been paid accordingly.
Want to do it right? Get a written lease, and attach an addendum that if you sublet the subleasee is not subject to landlord approval. Then you can put whoever you want in there for whatever price - but you'll still be responsible to the landlord for your lease amount every month.
- Wholesaler · Corona, CA · Member since 2017 · 37 posts · 28 votes9yFrancesco Barbati Correct way to do this would be that you move out. With permission and agreement with the landlord- Rent the property to the new tenant with a new lease in place at the higher rent. Write up an agreement and come to terms with the landlord to charge him a property management fee. It could be that difference you're talking about but it will be legal this way and everything will be disclosed. Gray areas aren't ideal to play around with especially if they can have you end up in court for a few thousand dollars worth of gain (which would be a loss at that point).
- 9yLevi T.Pro MemberRental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
Originally posted by @Francesco Barbati:
Originally posted by @Robert Nason:
I think it's your betrayal of someone who's done something very nice for you that is upsetting people
Wait a second! Who do you think was doing something very nice to who?
I would expect experienced investors been able to read between the lines, but I was wrong again.
The fact that I was renting below market value does not mean that I was renting below the "rentable" value of the place, and the fact that I was rehabbing it myself should have been a clear indication of that. He would have never been able to rent that place, and it would have kept not being able to pay the HOA (and subsequently risking to lose the place) and get in more trouble. Since it was obviously conveniente more me also to move there, and not only financially but for family reasons, I said ok, let's help each other out (I am very humble and frugal and don't need to live in mansion) and at the end it turned out that I was helping him more that the other way around and keep in mind this is only a part of the whole story. I have also paid rent much earlier when he need it.
I would expect seasoned investors and mature folks not to just read a couple of line, get emotional like teens and spew opinions or insult some one they don't even know, but on the other hand I admit I completely failed in telling the story, conveying a message, and asking the right questions so I apologize again and I thank every one for his time and critics, and I also apologize for pissing people off.
I should probably take more time think thoroughly before posting, but circumstances don't always help.
You really need to take two steps back and remove your personal interest in this property. Verbally or not, friends or not, tenants do not have the legal right to modify a property unless they got it in writing. Regardless of how you want to look at it, your landlord (that is what he is) never owes you anything.
I have seen hundreds of lease agreements where tenants have to fix and repair everything at their expense, and if a tenant took a junky condo and turned it into a multi million dollar condo on their own dime, and the owner sold it, the well that's the tenants dumb luck. Don't invest into something you don't own!
Legally he can sue you for modifying his property, if the modification improved the property or not. Without a written agreement that clearly outlines that you can sublease, well, he could sue you for that as well. Most states, if not all states, do not allow a 3rd party to act as a real estate agent for someone, so you could get in trouble for that as well.No matter your moral view on this, or what you feel you are owed, you have zero rights in the property unless it was given in writing, and you are fully liable on the flip side. Clearly your not happy that you invested a lot of your time and money to improve the property, and feel the LL is getting a better deal, but that is your own fault for investing in something you do not own.
My advice is you keep renting it and enjoy the rents he is leasing it to you for, or move on and let him do what he may with it.
Legally if you want to sublease it, you need to get a written lease from him saying you can sublease it. With $100 cashflow per month between what you would owe him and the sublessee would pay, your going to lose your shirt big time. I would not touch that with a 10 foot poll if I owed the property. Your better off offering to get it rented for him, then charge him $100 a month for taking care of business on behalf of him without all the risk on your end, but then you get into the entire real estate licenses thing.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
Originally posted by @Saad Khan:
Francesco Barbati Correct way to do this would be that you move out. With permission and agreement with the landlord- Rent the property to the new tenant with a new lease in place at the higher rent. Write up an agreement and come to terms with the landlord to charge him a property management fee. It could be that difference you're talking about but it will be legal this way and everything will be disclosed. Gray areas aren't ideal to play around with especially if they can have you end up in court for a few thousand dollars worth of gain (which would be a loss at that point).
Likely this would be illegal as most states require a real estate license to manage properties. But just like wholesalers tie up properties in contracts to assign their "equitable interest" to others, I'm sure the OP could tie up this property in a lease agreement and sublet to another. But he'll still remain liable for the original lease, which was my original point - its the gain worth the risk.
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