All Forum Posts by: Al D.

I am sorry that you have a PM who does not seem knowledgeable. It sounds like you got great advice from Swanny, Rob and Holton-Wise by phone, but I don’t know the specifics (and you don’t need to share.) This may be repeating what they told you, but perhaps not: Has the manager checked to see if the door is unlocked and keys may have been left in the mailbox or inside the property, visible through a window? You/your agent need to only give a “reasonable notice” before entering an Ohio property. Ohio actually specifies 24 hours (ORC 5321.4(8): “Except in the case of emergency or if it is impracticable to do so, give the tenant reasonable notice of the landlord's intent to enter and enter only at reasonable times. Twenty-four hours is presumed to be a reasonable notice in the absence of evidence to the contrary.”) I do not see where the law defines “notice,” but would make sure that my notice was in writing - does not have to be on the door. Once, in the middle of winter, when faced with a similar situation, I treated the situation as an emergency - had to make sure that heat was left on (and it turned out that it was not.) In May, if your PM should walk up to the front door in order to place the 24 hour notice, and hear running water inside the residence or smell gas (assuming, of course, there is gas service at the property or something else along these lines that their human senses should be able to detect,) you have an emergency. Otherwise, secure the notice to the front door and take a pic with a device that automatically records the location and time (today’s newspaper in the shot is also fine.) Once inside the residence, you can tell us what your agent will see, and we can plan the next step. Maybe you’ll find the keys and a note. If there is still any security deposit that the tenant knows he may potentially get back: The clever thing to do in this case is to reach out to the tenant in writing (text/email - for expediency) to ask where to send the remainder of the security deposit. Per ORC 5321.16(B), the tenant is required to provide forwarding address in writing (but there is no prescribed penalty for the tenant, short of an inability to get something additional from you.) There is, however, a potential penalty to you, per 5321.16 ORC, if you don’t provide proper notice within 30 days of the end of tenancy (but when does the clock start in your case?) Hopefully, the tenant will respond, which should confirm that they vacated - you want need to wait on a 14 day notice. Familiarize yourself with 5321 ORC as an Ohio landlord. I have come across local cops who don’t know laws associated with being a landlord (creditor,) and agents/PMs clueless on anything out of the ordinary. Make the law your friend - there is little to guess when you know the law. Not an attorney. No legal advice given.

Adrie Moses-bailey (now the name thing is working:) If you are purchasing this property with three other friends, and especially if it may be the first such endeavor for even just one of you, I hope that you will have a solid partnership agreement that outlines all expectations and possible contingencies. One contingency to consider is what would happen if the lender were to find out that you, as the original borrower, turned around and transferred title to an entity that involves something other than your own name. The lender may decide to accelerate your loan. That is the worst case, I imagine. You may also luck out and never have an issue. Only you can figure out if the situation is worth the risk. Assuming zip 28226: 740+ FICO, 30-yr fixed, 0 points, 20% down on a $99k investment condo can be had at 6.375% today. But 25% down can bring the rate down to as low as 5.375% (PennyMac.) That is for a conforming loan that would have to be taken out by a living person. Remember that rates change all the time. I am not familiar with that market, but there is a chance that some local lender, like a credit union or a regional/community bank, may have better terms. There is also a chance of a non-confirming loan - like a “portfolio loan” - from such a lender, where they may lend to an LLC. Although, the rate and other terms would likely be worse. Good luck.

Being that this is your first deal, you didn’t ask, and no one has brought this up along with their good answers to your question: Have you found a lender willing to lend to an LLC/other business entity? Also, your assumed interest rates may be too low today for a condo with 20% down, even in Manhattan.

NPR’s Terry Gross interviewed the Princeton professor behind the website today: https://www.npr.org/2018/04/12/601783346/first-ever-evictions-database-shows-were-in-the-middle-of-a-housing-crisis

George Loveless , in terms of any special taxes, there is something called Regional Income Tax Agency in the NE part of the state. Here is the current list of cities: http://ritaohio.com/Municipalities I am rather sure that the list has only been expanding over time. As a person/entity who earns rental income in any of these jurisdictions, you are required to file a return not only for the state, but also for RITA. There may also be other specific requirements for rental properties in some jurisdictions - the list is clickable for more info on each jurisdiction. I do not have local PMs, but would expect them to know all the nuances. I have a friend who bought multiple properties in various Cleveland suburbs, and the agent, the broker, and the title people were clueless about RITA. But the word is spreading, at least by me.

Does anyone have any experience with them? The company is in Indianapolis and run by Rodney J Gaard, who goes by Joey.

Jeremy Henry Since someone decided that my original post was “political,” (I mean, I can see how. But it was also factual - and to the point. But ok.) let’s try this again, without any “politics:” For anyone who forgot what you asked: You asked, “At what point and to what extent is a strategic default (or multiple defaults) a viable option?” While I cannot tell you what your “technical” options are, I must say this: Under Article I (One) of the US Constitution (so, a long time ago, when They were still thinking about ensuring justice, tranquility, common defense, etc., They also thought of this concern,) Congress is responsible for establishing laws on the subject of bankruptcies. They’ve been doing that ever since. You have that option today. You should not care whether someone may see it as harming your reputation, jerk-like, etc. These people are not you. I’ve never done this. Would never want to. In fact, I was on the “receiving end” of a bankruptcy once - my large business investment was completely wiped out. My reputation is certainly important to me. So is not being a hypocrite. When the law allows you to do something - and you’ve used up all other “viable” (for yourself/your family) options, this is still an option. I don’t know who your mentors were. I wish we’d spoken before you made the investments. But you are where you are today. Strategic defaults happen. People and businesses recover from many of them. You don’t have to be called a jerk for that. Best of luck.

Kim Herrick , I think that my sellers were very frustrated with me since before this issue came up, like when I realized that the way that how their listing agent described the properties in the package was a night and day difference to the reality of the properties’ condition. The sale still made sense, but at a lower price. I asked for it. They practically felt indignant for being asked for another discount after first giving me a large discount to the original asking price. I kept it “business,” and got what I needed. I practically apologized to them for their agent being a liar. If you don’t have an agent working only for you (not a dual agent who also represents the seller,) you always should. If you did not get an inspection (especially if it is a contingency in the contract,) get one. I’ve seen too many people “omit” facts in Disclosures, and later pretend they knew nothing. If you feel that the sellers have lied to you about something already, there may be more that you can’t even begin to imagine to suspect yet. Raymond Y. ‘s suggestion of either of the two points is correct. I hope that you are not represented by the seller’s agent, and that your contract has the right contingencies in it. Remember, anything can be negotiated. Unless you are in a hot sellers market (for duplexes,) the seller must consider the possibility of how much they may lose if the property goes back on the market. You are a bird in the hand - they should treat you as if you could fly away at any moment.

Kim Herrick , I recently had an estate sale package with - surprise the day of the scheduled closing - one tenant being behind on rent. While the listing agent said that I should close and then evict, I said no. (She said a lot of things, and I hope that she gets to read my “fond” memories of her that come up here and there, as she is a member here. But that’s not important here.) I had the sellers deal with that first - before the closing, which was put off by another couple of weeks. Check you purchase contract; you should be able to “stall.” This is not something that you did. Have the seller (“estate”) deal with the issue. You don’t want to find out later that there was no written lease, no provision in the lease for heirs (that would be you,) etc. - unless you have a copy of the lease and know it’s real and covers any potential pitfalls. I am talking worse case: good lawyer repping the tenant, “liberal” jurisdiction, etc. - cover yourself while you can, or demand a lower price. @Raymond Y, I am not a lawyer, but, if you intend to make a credit check as part of your screening of (pre)existing tenants, I am not sure that you should - “credit” had already been extended to them, and they may still be covered by that original contract. Maybe I am overthinking it. Good suggestion on asking the seller to lower the price.

Caleb Heimsoth , you just asked interesting questions that made me look at the tenant’s application and compare it to the public eviction records for him that I had not had the chance to do since getting the app yesterday. I discovered something interesting that certainly makes me wonder more whether MSHB did any DD before placing him. But to answer your questions in order: The purchase price was $74,000 (rent $795.) (Note: I just checked Zillow to remind myself of the purchase price - the property is not listed for rent there, only on the MSHB/MSBR website that I know of.) (Note to self: Really? Still?! Time is money in this business. I know that they, allegedly, have a lot of “foot traffic” to their office, but... it’s my money.) So, did they do a background check? The “discovery” I made after your question is the following: The most recent prior address the tenant listed in his app with MSHB was the address where there is a public record of his eviction in 2009. He listed that address as his address for the previous 8 years (the MSHB app was filled out in October of 2016.) But, as I previously stated, public records show him getting evicted as “recently” as 2011 from a different property. He did not list that residence at all. He also left “Why are you leaving?” blank. Additionally, he did not list any personal or credit references (or emergency contact, or additional occupants, including children - it’s a 3/2 - or vehicle information) in his MSHB application. And - as MSHB provided me what appears to be the whole onboarding package yesterday (except for the credit report - if any - but I don’t want it anyway,) the page titled “Rental Verification” (and is apparently for prior landlord to fill out during the verification process) is absolutely devoid of any information. Therefore, I just don’t know how else to answer your question about whether they did a background check on this tenant, other than to say: Not likely - based on the “evidence” I have been given so far. All I can say is that, just as you stated, some of the blanks in the app, and especially in combination, and especially in combination what what I can only imagine must have been on the credit report (I am speculating, but basing on personal experience,) should have raised a number of red flags. I may or may not bring up these concerns to MSHB (probably will.) I hope that they read these posts, and can tell me that I just don’t have all the info. I’m really pulling for them - I kid a lot on this site, but not this time. Also of note (and I don’t hold this against MSHB; although, given the number of times they must have had personal contact with the tenant in the last few months, they probably should have picked up on this:) The after-eviction walkthrough video that MSHB sent me caught a glimpse of a doghouse in the backyard - the tenant left a lot of piled up “personal property” outside, and the doghouse stuck out like a sore thumb, even as the camera panned very fast. No pets were allowed in the property. At this very moment, I am dragging my feet on calling a prospective tenant for a property I self manage - I don’t think it’s going to be a nice conversation, based on the blanks in her app. I will try to be as forward as possible in my questions to save her the $39.99 on Cozy - and she knew my standards when applying. Sometimes the blanks can be innocent, but she also revealed other info of concern in the app. We’ll see. I won’t have anyone else to blame if this should turn out to be a bad tenant. I’ve come a long way in my “standards” since accepting this applicant’s sister in 2010 by allowing her to bring her own recent credit report to my rental open house to save her money. I did not know about Cozy, or this site, in those days. This site is a nice relief, and from my 9-5, too.