All Forum Posts by: Cathy Malmrose

Thank you Pete. I love actually knowing the legalities behind this sort of thing and "supposed to" is something I would want to look into more. I will check state & federal law on this. If it isn't clear cut, I want to be able to see the boundaries better. 

I am selling all my properties this summer and wondering if the new landlord is legally required to honor the terms of my lease or if the buyer can replace the lease with their own? I am thinking they can switch to their own lease... When I turned over my properties in Flint to a property management company, the PM had them all sign new leases. Properties are in Michigan, currently owned by me, a single-member LLC who really doesn't want to get sued after the sale. I am trying to retire peacefully.

I am about to sell 2 quads, 1 duplex and 1 SFR in a small town in Michigan, listing through a regular realtor. I have picked out each of the tenants myself. They have all paid rent through the pandemic and they are all good people. It seems like the best move is to give them a letter explaining that I am selling the properties and they need to clean up any messes and keep their units clean while the homes are being sold.

Advice? 

@Dan Maciejewski I have. But I have also found that he doesn't know RE tax law in full and he's the best around here. So, asking the BP community.

If I want to sell off all my properties in 2021 if possible. I can show that I didn't pull much of a profit on any of them, capital gains should be minimal. (I invested very heavily in their renovation, rookie mistake.) What is going to bite me on the backside and how do I minimize impact? 

Trying to retire & don't need the income stream. Thanks.

Michigan. I'm in Lapeer, selling off my properties so I can retire and not have them on my mind. For example, one of the houses cost me $19,900 and I sunk $3k into renovation. Rent is $925/mo and they haven't missed a month. That one is in Flint and I wouldn't suggest that as your first market. I'd suggest some sweet little town like Lapeer, Michigan, only 30 min from Port Huron. Most of the houses in Lapeer are 150k. I'm selling a duplex for 160, rents for $1,275/mo. Michigan is a great place to start.

@Melanie Stephens biggest mistake -- I partnered with a contractor who could do the work, had the drive, and the connections but financial literacy wasn't there. Like a lot of contractors, if he had money in his pocket, he didn't need to work. When the money ran out, he worked. Since he didn't like to work, he ended up going door to door to collect rent from tenants, cash, and pocketing it then forgetting to deposit it. Tenants = cash and he needed it. Seems basic, but the details are bizarre enough that I doubt you'd use my story. He was 7' tall, shockingly good looking. The goal was to buy 40 houses in 40 weeks. We made it thru ~a quarter of it. Fast & furious. I almost went into the partnership without an operating agreement (how could I be so naive?) but my business banker made up a story about me needing to submit an operating agreement before I could open the account. (I checked later, it wasn't policy but it ended up saving me.) I have the court filings, the documents, the pictures. One tenant, a single mom with two kids died as part of this story. Like I said, probably more made-for-tv.

It becomes clear when you run the numbers -- percentages. For example:

1 home I bought for 57, reno for 27, rents for $1,200, regular 3 bd = keeping as rental 

Another was 168, reno for 49, maybe 52 when I'm done, would rent for $1,800, will sell for $290-350, 5 bdrm with beautiful finishing details = flipping  

It's not just the numbers. It's also the type of house. The flips are usually houses that have features that create the "love bidding", when a buyer falls in love with a feature and bids irrationally high. The 168 house is one I'm living in (like the BP community manager doing the live-in-flip). It has woodwork details that are so beautiful I've seen carpenters gasp when they see the staircase & built-in buffet. One of the carpenters was a 7' tall guy that I worked with on other homes and when he saw the woodwork on this 168 house he got a little teary-eyed. Yeah, this one is a flip. (I wouldn't rent it because if a tenant dinged the buffet or let their dog chew on a stair railing it would be more trouble than it's worth.) 

It's usually clear.  

Thanks. I was aware of the program, but hadn't considered it because what I am considering: 

1) Isn't geared towards low-income. It's geared towards everyone who is renting, whether they've owned a home before or not, whether they are low or high income. Think HSA -- that type of model.

2) The landlord is fully involved (MSHDA is program+tenant, landlord does little & isn't seen as leading the program). With what I'm talking about, the goal is to have the landlord promote their properties as "the last place you rent". If you're too deep in profit-motive you might not be able to see this, but it is in everyone's best interest to have people be more responsible with their housing. I am *not* saying that everyone should own a home. I am saying that when renters are aware of who actually owns the home, they respect their lease. It would be so much easier if the cancel rent culture faded away but no one is actually moving on it from what I've seen. 

3) Something needs to be done to shift the tide of entitlement with tenants. Landlords were actually forced to subsidize other people's lives far, far beyond "that's the risk you take being a landlord". I was exceptionally lucky and none of my tenants took advantage of it, but I took pre-emptive measures and I generally have tenants who are responsible future homeowners, MSHDA & not. Note I'm in Flint & nearby, areas that are some of the highest risk for evictions. I have seen there is a way to handle this so we can get back to the days of what it was like when Bigger Pockets was first started. Maybe I'm wrong? But it seems like we're going the wrong direction.

In case this helps with perspective -- I briefly started doing videos about what it's like to be a Philanthropic Landlord, but if there's not a single person on Bigger Pockets who gets this, then the market definitely isn't ready for it / may never be. There's an opportunity to create mutually beneficial relationships here, not just cash cows that are bad for people's quality of life.  

@Drew Sygit I have a dozen MSHDA tenants and have gotten to know it well. Not even close to what I was suggesting. I don't mean to be rude. I'll reread my post to see where I wasn't clear.