All Forum Posts by: David S.

I have had this happen several times before.  If the tenant allows me to advertise and show the apartment freely (it is in my lease and legal in my state to do so), then I would work with them in filling the vacancy.  I have had situations where the tenant put up roadblocks in showing the apartment, wanted to break the lease, and get their money back.  The fact that they want to work with you is good news.  The difference in their suggestion: I would do my own advertising and location of tenants. I wouldn't want them to put some deadbeat in there just to get their money back. I could accept referrals but that referral would have to be screened.

I agree maintenance and CAPEX are little low for C/C- area. Also, you may have higher than an 8% vacancy rate depending on area and state laws. How long does it take to evict in that state?

Insurance $600/year?  I would love to pay that little.  Again location driven.

If the PM charges a lease up fee, which most do and is usually 1/2 to 1 month's rent depending on local practices, then that would seem low too.

All and all, you have done quite a bit of research.  However, in C/C- areas, and as a rule of thumb, expenses are always higher and income lower due to vacancy/economic vacancy.

What is the city/state?  How does the crime look like in the area?  If you don't know, then call 10 PM's and see if they would manage apartments in that area.  If the majority say no...You could also check local databases for crime info.

Your repairs are 1% and CAPEX is 0.5%. I think that may be a little low, even though it is a condo and the HOA takes care of the outside.

Also, you did not put property management costs.  Even though you are managing it yourself, it would be a good idea to include it.

@Matt Slakey

Local and state laws will vary on how you can evict this tenant.

With that being said, let me tell you my experience with a situation like this.  Although it was not a Section 8 tenant, there was an unauthorized resident who moved in and was causing trouble in the neighborhood.  The tenant paid rent ahead of time, about the 20th of each month before the rent was due.  Therefore, I could not evict her on the easiest way to evict: non-payment of rent. I researched on what I needed to evict and apparently the burden of proof was on me, the landlord, to prove that the unauthorized resident ACTUALLY lived there and was not just visiting. I had to have a witness or some type of other proof.  Witness against a troublemaker? Not going to happen. I waited and waited.  There were no other lease violations so I was stuck.  Several months later, a breakthrough occurred and the troublemaker was arrested and put in the local paper.  In the paper, it had his address.  Bingo! The address of my rental property. I proceeded with the eviction based on this new "evidence" and won.

What to also consider is that Section 8 has rules about this.  If you truly want them out, call the case worker.   However, the tenant will more than likely say that that person "is just visiting."

@Nat C.

Thanks for posting these pictures!  15 people in a 3 BR?  What a mess, been there before.  It is got to be way past Fire Marshall rules in your area.

Maybe @Wayne Brooks or some Florida landlord has some info on this. Having no lease makes it difficult in any state.

I think this is a good answer.

Also, you might want to ask, do I want this agent to refer other deals to me again?

If so, treat him/her right.  Give the 25% and see if he/she is happy with it.

I also use a Monthly Rent x 3< Gross Monthly Income formula.

I find that if there are no underlying personal issues, then this is sufficient income to pay the rent.  Most of the large apartment complexes in my area also use that formula.  

However, I recently approved someone with a $700 car note and am beginning to think about also doing a DTI ratio. We'll see.

This is good info.  I would like to add to it.

By all means, let your contractor walk through with the adjuster.  With my claim, it got me a better payout because the adjuster was leaving stuff out.

As far as fixtures, you will get paid for what was in there.  If you want improved fixtures, you may have to pay out of pocket.  The difference in price of material may not be that significant.  Or maybe the contractor has some discounts somewhere.

Your biggest 2 hurdles will be permits and the mortgage company. 

Permitting authorities often have power trips and that will cause issues. Also, you will have to bring everything up to current code. Hopefully, your policy has an ordinance upgrade payout.  It may or may not be enough.

If it is a large payout and you are current on your mortgage, then the mortgage company will confiscate the insurance check and give out small advances based on the percentage completion.  They require an inspector to come out (sometimes they make you pay an inspection fee---this is not covered by insurance), submit a report, and then they will decide how much they give out.  Absolutely malarkey.  Sometimes between each inspection and payout, it was 3 weeks.  As a result of this BS and in order to move the project forward, I had to use my own money and wait on the reimbursement.  One of the inspectors told me another homeowner was in the process for over 2 years.  He needed money to pay the contractor to work on his house, but the mortgage company would not advance the money.  If you have a replacement policy, the depreciation part will be payable upon completion.  This could be a large sum, mine was about 35% of the claim. If you have an ACV policy, you will not get the depreciation and you will be coming out of pocket for the difference.  Also, if you have loss of rents coverage, you will get rent from the insurance company every month.

If you are not current on the mortgage and it is a large payout, the mortgage company may completely take you out the loop with the money, meaning that they will deal only with the contractor.

Pick up the following book: "Every Landlord's Legal Guide" by NOLO if you are not renting in CA.  You may also want to look at all of the NOLO books at the following website:

NOLO Landlord Link

Here is the link to the CA Landlord book by NOLO:

California Landlord Law Book

The 1st link also has a lot of freebee info as well.

You need to learn your state and local laws concerning landlords.  The NOLO books have leases and forms that are very good and included in the books above.  You may need the CA specific materials if you rent there. Since I am not in CA, I did not read the CA book but it appears to be the equivalent of "Every Landlord's Legal Guide."

Next, learn the ins and outs of being a Landlord. You can go to your local library and borrow all the books on the subject. I have read so many and can't remember all of them but I can remember "Landlording" from Leigh Robinson was good.

Sounds like you are a great rental market!

7 people in a family-may get you in trouble with HUD for familial status. However, if you have a policy of maximum number of people per bedroom, such as 4 people maximum for a 3 BR, you should be ok as long as you are consistent and notify them in your ad.

Sloppy Car                               not a protected class, ok to discriminate

Rude people                             automatically disqualified, not protected

Smokers                                    not protected

liars                                            not protected

opposing football team fans      not protected...etc

Since you are in that great of a rental market, you could raise the bar on your qualifications. Some ideas: minimum credit score 700, DTI less than 20% (or whatever figure), minimum income 3.5x rent.