@Cody DeLong Personally, I'd issue written warnings but not rock the boat too much, given it's Winter.
The right thing to do is to fully enforce your lease immediately with no exceptions but doing the right thing at this time may place you with three vacancies instead of just one and this isn't the season for that.
Others may disagree but that's what I would do.
Originally posted by @Cody DeLong :
Had my first turnover ands put in brand new flooring last month, already rented out. Just got an awesome call from a tenant today letting me know he's leaving as the two apartments on the dies of him are still smoking with the no smoking policy. His apartment reeks of smoke all the time and he is not on a lease due to him being an inherited tenant.
So here is my dilemma, I want a non smoking apartment complex. I also want everyone on leases as people leave. Knowing this guys apartment reeks of Cigarette smoke, what would you do? I could offer leases for the two people staying letting them know that they can no longer smoke, I can just keep them there and fill the middle apt, or evict the problem tenants and have 3 to turnover mid winter. I have 11 units total in this complex, we already did a ton of fixes the last 3 months to the point where this winter should be smooth sailing besides if something with heating goes.
What would you do?
Congrats Cody! Great to read your story from start to finish (up until this point). I'm under contract with a partner on an 11 unit in NH and foresee a few of the same issues to deal with myself.
Tough call on the smoking issue. We plan to switch to no smoking if our deal goes through. This means we will lose 2 tenants who have otherwise been good renters for a decent period of time (4+ yrs). I walked into one unit on inspection and thought it was a smokers unit, but it was all from the next door smokers. A real issue people have to deal with. Is the 1 non-smoker worth keeping over the 2 non-smokers? I think you'll deal with this issue if you replace the middle tenant anyway. Definitely could be a costly decision. Can you move the non-smoker to another unit? I would probably work to get the 2 smokers out with hopes the middle tenant stays for the short term.
Best of luck!
@Sam B. The issue I'm running into is the middle tenant is leaving regardless. He basically said he was planning on leaving anyways and is set on leaving now to move in with his GF early. So my dilemma is this, I have 2 smokers next to the middle unit, I cannot rent that middle unit until I get those smokers out, or I just fill again with a smoker. I feel like I can do one of two things, either evict them all, or do warnings and maybe fill the middle one with someone that doesn't care? Also no one is on a lease except in my other building. These are all inherited tenants that I actually want to try to get rid of slowly by end of next year or have on a lease.
@Richard Lovering See above reply to Sam. Its going to be a tricky scenario for me. I already know that I will need to clean and paint the middle unit, and the side units will have to be cleaned, painted, and probably some stuff replaced because the smoke will me too much for just cleaning. On top of all of this I planned on renting out to some Section 8 since the market up here is perfect for that.
The positive note here is I have enough income coming in from it to at least cover my fixed costs and have extra for anything that pops up if I were to have 3 vacant units until mid January to March/April. I knew it was going to take a couple years to get this place stable and where it should be so none of this is a surprise.
i would get written policy made up and hung placed publically all around entrances and exits, over due it at eye level, then email and mail same new bld policy to all units. legally must have signs posted up along with contract. as per my lawyer written signs are like public bld policy. then require in lolicy a fee. i charge $25 per butt and $55 hour cleaning fee. and then buy and install activtek system from me to kill all smoke odors and hit them with fines for having use air scrubbers.
keep sending them air and surface cleaning bills every 3 days.
Great post, the updates are really informative. It's fantastic that this deal is working so well for you, and that your due diligence has been done so well.
Not sure if this is still current, but I would evict the smokers & get a few new tenants in place. I don't think that a non smoker would be happy living between them, and if they didn't care - I would question the quality of the tenant. How's this going for you?
So we filled the unit pretty quickly with Section 8 above what we were planning on getting. I had to invest about $1k into the turnover due to a lot of things not to code with outlets, drawers not working, fan in bathroom not working, and painting. However that amount came from my rent and not out of reserves. The numbers are solid here so I’m not really out of pocket. Turning 11 units is going to be a process I’m learning. I probably won’t turn all the units for a few years. We’re thinking of evicting two tenants who are constantly late on payments. They both have been paying back and are almost done but I really think after the winter I’m going to get rid of them if they miss a month again. It got to almost $3k owed between the two. Now it’s down to $1500 and regular payments but still. We’ve cracked down too with notices and each time we do it they pay the latest month and part of the latest month.
@Cody DeLong I like the idea of making them sign a no smoking lease, or leaving. What did you end up doing? Any new updates?
We kept smokers in and have been replacing with non smoke leases on the turnover. It’s worked well so far.
@Cody DeLong - I would keep your smokers on a month to month, that way when you want to evict them you only have to give them a 30 day notice with no reason. Put them in a 12 month lease and it makes it a bit harder to evict, still can especially if they violate it and a lot of times smokers will. Just saying it is really easy if they are month to month.
I have also enforced the max late payment fee on my tenants. Which in Maine is 4% after the 15th. It basically made it so the rent was always paid before the 15th lol, have one tenant that still pays as late as possible, usually on the 13-14th. They also received a 7 day notice to quit with the fee btw. I have also heard some owners here in Maine giving that notice on the 8th to get the eviction process started sooner if needed.
@Carl Hebert I'm curious about if/how you document that fee? Do you have a letter stating that they are being feed for late payment?
@Carl Hebert All the smokers are all month to month. I didn't want to evict during the winter as the damage was already done anyways, it cant get much worst then it is. Once we fill up this vacant unit with this smoker that moved out we will be evicting one tenant in May as he is a chronic late payer. I charge the maximum late fee as well and don't screw around with that. I still have chronically late payers. They'd rather pay the fee I guess.
@Elliot B. - I have it right in the lease. What day it will be considered late (15th) and how much (4% of rent).
8. Late Payments. In the event that any payment required to be paid hereunder by Tenant is not made within 15 days of when due, Tenant will pay to Landlord, in addition to such payment or other charges due hereunder, a "late fee" in the amount of $45.00.
I also make sure to go through the lease with the tenants when they sign. I remind tenants that haven't paid by the 7th about the late fee and ask why they haven't paid yet :)
The 4% and 15 days are all from the Maine Statutes and Pine Tree Legal has them on their site for tenants information.
@Carl Hebert Sorry I should have been more specific... I meant, once the tenants is 15+ days late on rent, do you send them a letter/statement that tells them that they now owe a late fee? Or do you leave it up to them to understand that they owe it and include it with their next payment?
@Elliot B. - Ah! I have it in the 7 day notice to quit. It shows the amount due + the additional 4% late fee. You could, like some others on here, give that notice on the 8th. Doing that sets you up for a faster eviction process. I would only do the notice on the 8th I think for someone I know is not going to pay.
Then on the 15th you can serve them with the 30 day notice from your lawyer (I would use a lawyer from this point on myself).
I mentioned I have one tenant that always goes to the 13-14th each month, but rarely goes past that now because of the late fee I charge. Her previous landlord did not have a late fee policy in place and she apparently was used to paying on the 15th-20th each month.
Out of 18 tenants she is one of two that do not pay in the first 5 days of the month. We just had a new lease signed by the other late tenant and I had raised the rent by $50 and said if paid by the 5th we would deduct $25 from the rent. April is the first month on the new lease and they paid on the first. Good times!
So hoping that is the new trend for them and leaves only one not paying at the beginning of the month.
@Carl Hebert all good info. Thank you. The rent discount if paid by the 5th is a great strategy.
@Cody DeLong Hey Cody - nice work on the unit - How did you use the RE agent for transactional purposes only? What did they do and what did they not do that you did to charge a flat fee? Thanks!
Originally posted by @Carl Hebert :
Originally posted by @Elliot B.:
@Carl Hebert all good info. Thank you. The rent discount if paid by the 5th is a great strategy.
Your welcome, I got the idea from @Ryan Murdock he posts a lot on here.
That idea definitely did not come from me. I know of several people who do it but for years now I can't figure out how it's legal in Maine as all it really does is charge a late fee prior to 15 days. Anybody here ever test the early pay discount in court? I'd think you'd get blown out of the water by Pine Tree Legal. I would love to be wrong though.
Also, for the standard 15 day late fee - if rent is due on the 1st don't assess the fee on the 15th. Wait and do it on the 16th as that's actually the 15th day of it being late. And late fees also need to be stated in writing. If you have a tenancy at will with no lease you can't charge any late fees.
@Ed Moran They did the contract, handled all the paperwork between the title company etc. They facilitated everything a normal agent would do, they just didn't find the deal for me. The agent is an agent turned friend after my wife an I bought our current house. She was the one who offered to do it and told me her price. It worked well. Myself and the seller split the cost 50/50. She didn't bring me on a walkthrough or anything, I did the legwork.
@Cody DeLong Yeah I typically find my own deals and have a hard time paying 2-3% which is why I asked. Good luck.
@Carl Hebert , @Elliot B. - I'm with @Ryan Murdock on this. Discounted rent to pay by the 5th is effectively an illegal late fee assessed on the 6th. However, there are other incentives you can provide that I think would mass legal muster. If your original plan was to reduce rent by $25/month, then you're basically willing to give back $300 in annual value as a reward for this behavior. So maybe these might be alternatives.
Provided that 12 months of rent are all paid no later than the 5th, you could:
*Guarantee a lower rent increase on lease renewals (1%-2%)
* Offer inexpensive but high perceived value items (i.e. big screen TV) for lease renewals
* Provide a Winter Fuel Credit in December if tenants pay for heating fuel
* Offer a choice of unit upgrades that you may have been planning to do anyway (repaint, new appliance, ceiling fans, etc.)
Basically, find ways to incentivize and reward your tenants with something other than a rent discount. You achieve the same objective, but legally and perhaps even more effectively.
@Ryan Murdock - I think it was in an earlier post about this same problem and your name stuck in my head lol, I am pretty sure you had a few comments in there :)
You are spot on about making it being the 16th for the late fee.
I never thought about a tenant without a lease, lol. All mine have one, even the two that are section 8 with tenancy at will, but you are right if a tenant did not have a lease legally you couldn't charge a late fee in Maine.
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