All Forum Posts by: Richard F.

Quote from @Luke H.:

 
Tenants of 3 years sent text message notification that they were leaving in 3 weeks (breaking lease early by 8 months).
4 days before their move out date , they call and say their home purchase fell through asking if they can stay.

Want to get anyone's feedback on legal creative solutions.
 

Aloha,

What's the big deal? I have to assume they have been good Tenants since you have renewed them in the past. Let them stay...no harm, no foul...they are not breaking their agreement after all. You should be happy, not looking for ways to penalize them. Turnovers can be expensive. You WANT Tenants to stay for years...as long as you inspect at least annually to ensure they are taking reasonable care of the property.

When their current term is up, and knowing they are looking to buy, why not let them go month-to-month, or perhaps a 3 or 6 month term if they have a new purchase offer in the works. We always pro-rate rent to the last day of possession, without sweating over which specific day they will be out (as long as we did get the minimum required written notice (text messages are not acceptable, and likely not "sufficient notice" per local law) of their expected move date, and their existing term has been completed). Delays in moving are pretty common, especially when also coordinating a home purchase.

When an Agreement is broken early, you cannot handcuff them to the property to make them stay...local law dictates how you handle it. Usually the Tenant remains responsible for rent until end of current term, or until unit is re-rented. YOU must make the good faith effort to rent it, and pro-rate the incoming and outgoing Tenant rents appropriately. You usually cannot charge both for the same days.

It just makes more sense to allow time for a proper and thorough preparation of the vacant rental before showing, and especially before committing a move in date, to prospective new Tenants. Why create stress for yourself? Now, if they were bailing on their FIRST term 8 months early, that might be a little different, but in my opinion you never want to keep a Tenant that does not want to stay. You will just be butting heads constantly.

Aloha,

Here is a link to some sample Adverse Action forms:

https://www.consumerfinance.gov/rules-policy/regulations/100...

Keep it simple...if you deny someone, issue an Adverse Action letter. I always attach a copy of the AA letter to the Rental Application package, which is filed (securely) for a period of time (based on your office record retention policies) before being destroyed. Check off the appropriate choices that apply...I always check off ALL that apply. And, always provide the contact info (even if just a web address) for ALL actual reporting sources. Court records are often online; services that are aggregating multiple types of info from multiple sources, such as so-called "screening" tools, that might provide a "rentability" score, rather than an actual FICO score are another common source.

My standard practice has always been to process applications in the order received. They either meet our criteria; are approved and we move forward; or they are denied and we move on to the next application. Also, once someone is denied, there is NO further review or discussion, and I do not verbally inform them why they are denied. I simply advise the AA letter will provide them with answers and info on where to challenge or view the source material. In some cases I may ask for additional documentation to verify information they have already provided, such as savings statements or tax returns. I do not view that as requiring an AA letter unless I do ultimately not rent to them.

Quote from @Ta'Voris Murray:

Im currently in the process of looking at a duplex that is already completely leased out and has been for the past 12 years. The owner is selling because they are looking to purchase a new property quickly, so the deal that I would get on this property is a good one to say the least. With this being my first rental property (potentially if all plays out well), Im hard press to think about the what if's.

Aloha,

You state that it has been occupied for 12 years. Odds are high that little to no updates have occurred, and everything is, at best, tired looking, if not "on it's last leg". If you are concerned about being able to replace a basic appliance, as a self proclaimed "rookie" you are just asking for nightmares. When was the property built? Is it a legal duplex? Do you know what documentation you should request in your purchase offer? Do you have a copy of the local LL/Tenant laws? Do you know what an eviction would cost, and what the process would be?

You are considering the first or second most costly purchase of your life at this point, you need to be sure about what you are planning.

Aloha,

A lot depends on your specific RE/construction/finance/law related knowledge and people skills. Just owning your own home is not much of a qualification to start managing others. There are a lot of laws and rules that need to be followed, and there are yearly changes in many applicable laws to keep up with. Failure to do so can result in very costly fines, lost rent, and and unnecessary aggravation. "I didn't know about that" is rarely an acceptable defense in this business. As a LL, you have a big target on your back...you are offering costly goods and services to the Public, THEY will often be the ones that hold YOUR feet to the fire...with free legal aid and advocates.

If you do not already understand the fundamental systems in your property, you will have expensive learning sessions with plumbers, electricians, HVAC people, carpenters and installers. Some will point out issues to you, others will create them for you. It used to be that women were taken advantage of when they had car troubles at the service station. Now it's mom and pop LL's when they are in crisis mode due to Tenants, leaks, equipment failures, etc.; and the costs of those lessons are far greater.

To be clear, no PM is "on standby" 95% of the time for your unit(s). They have scores, hundreds, possibly thousands of other units keeping them generally quite busy, and typically available 24/7 for legit emergencies. They are just very good at prioritizing, troubleshooting, decision making, delegating, and establishing standards for others (team members, contractors, Tenants, Clients and others) to achieve. If you think that your 10% management fee is too much...break that down into an hourly rate comparable to licensed trade people, while considering that the PM cannot take the kind of shortcuts an individual Owner might.

Aloha, 

I recommend never providing your personal cell phone to Tenants. Texts are useless for decent business record keeping. Use e-mail or snail mail, filing for the long term. "Office" voice mail (or second line, phone, whatever). You are running a business, present as one, with Business hours. You can always set up answering devices/services to notify you of a waiting message, but check it on YOUR time. Actual emergency calls are pretty rare, IF you have properly prepared your rental unit.

Aloha,

Here are most of the documents you will need to get familiar with. You should closely review the HAP contract to be sure you understand the terms you will be held to:

https://www.hud.gov/program_offices/public_indian_housing/pr...

Plan on waiting weeks to months for the first payment from Housing. Plan on paying for repairs required at re-inspections, even if potentially Tenant damages. Don't count on Tenant paying their portion of rent if HAP does not pay full amount...and no, you cannot work a "side deal" with the Tenant. Be sure you understand the process and costs for eviction in your locale, and prepare accordingly. Be sure YOU also perform at least an annual re-inspection, prior to the Housing re-inspection, to make sure housekeeping is acceptable and to address any issues that could fail your Housing inspection. The rent stops if you fail, and may take weeks to restart, and may not pay for the entire period since the unit did not meet the requirements of the HAP contract.

Aloha,

Typically, local LL/Tenant law requires you to make a "good faith effort" to re-rent when someone bails early; and also prevents you from double dipping by charging incoming tenant for days already paid by outgoing. Regardless of whatever "penalty" you settle on, be sure you do insist rent is pro-rated to their last day of possession, and keys are turned in. Also be sure they are required to continue paying rent as it comes due each month, and that the SD cannot (usually by law) be used as the last month rent. The SD should always only be used for damages/cleaning AFTER vacating first, then if anything left, apply to rent as appropriate.

Aloha,

I used to utilize the remodeling and renovation cost estimator from here:

https://hometechonline.com/

They have a subscription that updates your pricing quarterly, and their software worked easily for creating takeoffs or full estimates. You can save groups of items, for example a typical bathroom's worth of materials...vanity, plumbing, tile, fixtures, lighting, etc., and re-use them as a starting point for another project.

You separately determine your overhead, profit, and hourly rates for your employees/contractors, and easily become consistent with your estimates for similar properties.

You do need to have a reasonably good fundamental knowledge of construction and materials, but you can also grow into it.

Aloha,

For all common area entries...lobby, rear entry, laundry, pedestrian gates, etc. you can have high security locks installed. They will have keys that cannot be copied. You charge a refundable deposit for each key, which you refund upon return of the key at moveout. Just be sure to obtain more than adequate "extras", depending on the brand you end up getting. Some systems are no longer available, requiring you to change all of the locks AND keys again when you run short. Medeco should be good for many years, and there are others. You can also consider a proximity reader and fob system to really maintain control. Each fob is registered to an individual, and every swipe of the reader logs date, time, and ID of who accessed the area.

Aloha,

You have already gone FAR above and beyond, given the ambient temps. AC's can only reduce the temp by around 20 degrees from ambient. 

I would just let them out of the Agreement, charging for every day of occupancy, and cleaning/damages based on conditions found after they turn over the keys and possession. If they want to take you to small claims, let them. Just be sure you have every written communication from them regarding the AC (and any other issues), as well as your receipts for repairs and improvements as you have described.