All Forum Posts by: Aaron Lewis

Don't know if you're still looking, but does it need to be one story, and does it need to be in Modesto itself? I ask because I have a management company and we have a 4 bed/2 bath single story home for rent in nearby Patterson that could work. And we have another rental property coming online in Modesto shortly but it's a two story. 

Reach out and let me know what might work. Chances are I may have something else for you too. 

Aaron Lewis
Valley ONE Property Management
www.valleyonepm.com
209.353.3030
Lic# 01965910

 Yeah, I don't see why this has turned into a harsh complaint-fest. We had a property where everything that could go wrong, did. Not all at once, but worse: one new thing every month. Sometimes it happens. Kind of like flipping a coin and getting heads 7 times in a row. SUPER unlikely, but when you smooth it out across 100 flips, the proportion becomes more normal. Here I mean sometimes there's a string of bad luck at a home, often related to its age and/or degree of wear and tear (which, like our national debt, is CUMULATIVE and isn't entirely all about the person occupying the office--er, I mean house--at the time). But then we have a ton of other properties where nothing happens. I've had that before and thought it was the tenant, but really there was no reason because each thing was a legit problem/condition that didn't really have to do with the repair. 

I'm not an attorney and certainly not one in Texas, but I'd imagine a late fee of 5-6% on the 6th if not paid in full by the 5th, plus $10/day thereafter, would be reasonable. I figure, if credit card companies can charge 22-28% if not paid in full by the due date, then 5% plus $10/day is pretty reasonable by any normal standard.

Glad you got your Sept rent and things have been good since. Hopefully it continues that way..

Rehj, 
Some strong opinions in here. I like and share your overall philosophy to "do unto others as you would have them do unto you" and it sounds like you do that pretty well. 

I do know my wife and I, when we were young and especially first time parents, we were sensitive about everything. We read up and got so much solicited (and unsolicited) advice about parenting, about all the ways our new baby could die, we were freaked out about everything. Typical of babies, we also didn't get a full night's sleep for what seemed like forever. Add on top that they lost one of their children, I'm sure this has 10x'd their anxieties. 

You could consider yourself lucky that this is your only time-intensive tenant. Not bad odds, in the grand scheme of things. I agree with your concluding statements. No reason (or basis) to evict. If they struggle to pay on time, but pay you in the end, then they're really just paying you a higher rent on average. It is what it is. (A suggestion: if you don't already, I strongly recommend using a late fee that compounds daily. Ours is 6% of the rent amount as an initial fee if rent is not received by the 5th, then $10-20/day thereafter. It keeps a fire lit under them, to pay ASAP.) 

My philosophy on charging tenants is this: if it's due to abuse, negligence, or major dumbness--we enforce the contract that tenant is responsible for any damages to the house. But if it's reasonable ignorance (i.e. I might have done the same thing myself) then I don't charge the tenant. 

Example: recently, we had a tenant in a brand new, new construction home. A few months in, he reports the garbage disposal wasn't working. Made a claim on the builder warranty. They came to inspect, turns out there were small rocks in the disposal that locked up the grinder teeth. He wasn't using the food waste disposal for food waste, he was cleaning out a fish bowl with no regard to what fell into the disposal. He was responsible for the cost to repair/replace. 

But if young parents were running a humidifier related to an illness, which caused knock-on effects that affected the HVAC, and it cost a service call fee? I might have done the same thing. Using a humidifier isn't abusing the house. It's not negligence. Frankly I still don't quite get how that caused the problem. But a humidifer is a reasonable action for them to take. There's no reason to charge them for that. 

Some tenants are just opportunities to learn more patience. You sound like a good man Rehj. Perhaps they're just God's way of developing that part of you a bit more. 

Two thoughts on this:

1. As others have said, I'm not an attorney either, but I *believe* once things cross onto your property, you're able to do what is necessary at that point. I don't see how your neighbor can or should be liable in any way. Like, how is that their "fault" that the tree grew up a certain way? You probably just want to proceed as though it were a tree on your own property i.e. deal with the problem yourself. 

2. How to fix: you can either repeatedly apply band-aid fixes (snake the line with a blade that will chop through roots as long as they're not already too thick, and make it a recurring maintenance kind of thing), OR you can replace your sewer line. I had the same issue on a rental property of mine. The first couple times I just did the band-aid. Then eventually I sucked it up and got the sewer line replaced. It was a pain, but then once and done for another 60+ years. 

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. 

Karen:

Don't be a 'Karen.' Think about it. If tenant moves out of the country, what would an eviction do? 

1. Eviction means to 'evict' the tenant. It means to regain possession of the property. Your tenant is breaking the lease by moving out early. You have possession. There is no basis to evict. It would be a waste of your money and the judge would laugh your PM out of the room for evicting someone who's already gone. 

2. A US court can't do anything about someone in a different country. The US only has jurisdiction over the US. That's why people flee to another country sometimes. And I don't think it's worth the CIA's time to tack down your tenant who left 6 weeks prior to the end of their lease. 

3. As others have mentioned, you presumably have 1-2 months worth of rent held as security deposit. You're probably already whole, or close to it. You should thank your PM for not wasting your money on such a nonsensical proposition as a eviction to regain possession of a property s/he already has possession of, against a person who isn't in the country, when you already have a security deposit to cover most or all of the vacancy. 

And you're asking whether you should 'report' them to BBB? Puleeze. Be better than that, Karen. 

PS: we manage properties for out of country owners. We text them. They text back. That means nothing. If you can't get over your trust issues you probably aren't cut out to be a investment property owner. 

As @Sam Yin mentioned.. I really hope you're not trying to do this on your own. Especially in California lol. 

Define "eviction": are you in negotiations with a delinquent tenant? Have you served a 3/30 Day Notice? Or have you filed the Unlawful Detainer action in court? Filing the UD is what formalizes the beginning of an actual eviction. 

Depending on where you're at in the process, another tack might be negotiation with money. The very few times I've had delinquent tenants that needed to be evicted, we did a 3/30 Day Notice (the stick) but then also offered "cash for keys" aka "relocation assistance" aka "financial relocation assistance" (a carrot). 

Not only has the cash for keys worked every time for us, it's also cheaper than eviction, faster than eviction (and less vacancy = more rental income), AND ensures the place won't get destroyed and/or squatted in by a relative they let move in, because those are part of the terms of the CFK agreement. 

You make an offer. You prepare and jointly sign the CFK/FRA agreement with the date by which they'll be out, you show up that day to make sure they've fulfilled their end of the arrangement, and then change locks, secure the place well, and post NO TRESPASSING signs immediately. With lots of photos as documentation. 

If anyone enters thereafter, it is then an easy trespassing situation for law enforcement to deal with. 

Also, importantly: you didn't mention a credit report. 
You need a credit report. 
You also need proof of income, and we insist on two months of bank statements as well, to show their funds. You learn A LOT about someone by looking through their bank statement.

We use it to verify the pay stated on their pay stubs (as @Nathan Miller noted, fraudulent pay stubs are sadly very much a thing). It shows us if they have funds for deposit plus first month's rent. We see whether they were lying about smoking (smoke shop, hooka lounge purchases) or not having pets (veterinary clinics, pet store purchases). We see whether their account gets overdrawn or very close to it, important if they're applying for a rent that is significantly higher than their current one. 

In short, you also want: 
-detailed credit report and history for all proposed adult applicants
-pay stubs
-bank statements
..in addition to the other things you and others have noted. 

I agree with @Bruce Lynn that you should rethink the common "no pets" philosophy. Some 70%+ of households have a pet.. do you really want to cut out 70%+ of your target market? (Hint: no. No you don't lol). A better approach is to mitigate the risk by qualifying the pet alongside the human. Licensed, has all shots and immunizations, name/breed/age/weight, pic, maybe even a meet-and-greet. Then get a larger security deposit due to the increased risk, possibly even a premium on rent (we call it "pet rent"). 

Another point that is hard to overstate: pets are reflections of their owners. Thus, obnoxious, untrained, unrestrained, and pets likely to cause damage are owned by tenants who are less responsible themselves. And if you've got experience underwriting rental applicants, the less responsible applicants stick out like a sore thumb. On the other hand, mature and responsible tenants with good jobs, responsible credit, good references, and the discipline to manage their money well--those people's pets are responsible and well trained, and tend to cause very little, if any, additional wear and tear on the property. 

If you source a quality tenant and have a good security deposit, you shouldn't be concerned about pets. 

PS: pro tip--get a property manager. They're the pro. Your home is worth how many hundreds of thousands of dollars? It's probably worth it. Bad tenants prey upon DIY landlords. Good PMs sniff them out nearly every time. Even if you don't want them to manage, many (including us, if you want to engage our services) will do a Lease Only service where they vet the tenant on your behalf. The #1 most critical thing in rentals is proper tenant selection. Using an expert for the #1 most important thing is something you probably want to do. 

Aaron Lewis, Broker
Valley ONE Property Management

Ralphie, 

Thanks for the detailed post. There's a lot to unpack here. As an experienced owner of a real estate brokerage, a property management company, flipper, investment property owner and active stock trader, these are some of my thoughts:

You don't need 20% down to purchase a home. With an FHA loan you are able to put down as little as 3.5% down and finance the rest. But you do need employment income. No traditional lender I know will offer FHA or other type of financing if there is no employment income local to where you are buying (unless it's remote work). Even an offer letter for a job you're about to relocate to TN or elsewhere may work. That may be the first order of business for you to consider.

When considering whether to sell vs. rent out a property, my general advice is to consider the rental income the property would provide (and equity gains as the property continues to increase in value), and determine whether your use of proceeds from selling it would give you a better return on investment. In other words, if you've got a better opportunity for that money, then sell it and pursue the better opportunity. But if not, your property is a highly lucrative source of income and wealth building. I often compare it to the Aesop Fable of The Golden Goose. If it lays a golden egg for you each month, don't sell it--unless you have a better use for that money. 

Some options you may want to consider: if selling your home in Martinez, CA allows you to pay cash for something in TN then you wouldn't need to worry about a job in order to get a mortgage loan. While you'd have a smaller sum left over if you paid cash, it would give you some breathing room/time to re enter the workforce. Once you do, you could refinance to pull some of that money back out (though generally, if you don't need it and don't have a compelling reason for it, might as well remain a proud 'real' homeowner). 

I know this is off topic, but COVID restrictions seem to be rapidly winding down nearly everywhere, even in the Bay Area. Would the gym bounce back and recover if you held on just a bit longer? 

Lastly, I've helped a number of people relocate out of California. I don't know if you've already done this or not, but I'd strongly recommend you take at least a couple of trips out to the Nashville area and spend at least a few days there, if not a week or more, to get a feel for the area. Not as a tourist, but as though you were a local. Spend time talking to people. Get a sense for the demographics, the attitudes, the politics, the beliefs, etc. I say that because there are few places that are a bigger contrast than the Bay Area and Nashville. It might be the perfect thing for you! But you may feel like a fish out of water. There's only so much of a feel for a place you can get without spending some time there in person. The more in-person time you spend there before uprooting your family and buying a house there, the less likely you are to later regret it. 

Hopefully this gives you some good food for thought. I'm happy to engage further if you'd like.

Aaron Lewis