All Forum Posts by: Derreck Wells

If you keep it illegal, a tenant will use that to hurt you at some point. Do your research and find out what it would take to make it a legal 3 family before you buy it. 

Hey Justin, something to think about, you wrote "Major con is the house needs major repair including de-leading, removing asbestos siding, water damage, and redoing the electrical panels." Well, as the building sits with 2 one bedroom units, you will probably never have to delead it. As of right now, the law says that you only have to delead if there's a family with kids under 7 living there. Where it's a one bedroom, there will probably never be a family with kids moving in. You can't discriminate against a family, but I'm pretty sure that you can not rent to a family based on it being a one bedroom and the local occupancy laws. It should be pretty easy to find a better suited tenant for the unit then a family. 

Also, if the unit has never had an Initial Lead Inspection done, during the remodel it's legal to replace windows, doors, door jambs, and anything else that you're remodeling. Even if it has lead paint on it, if you're remodeling, you can remove it. If you're specifically trying to delead the unit, you cross the line into Unauthorized Deleading and that's illegal. If you happen to remodel all or most of the lead paint right out of the unit, then when you get an inspection done for your Lead Cert, it would be a lot cheaper to delead if there's any left. If the unit has had and inspection and it hasn't been deleaded yet, you're stuck. You'd need to get it deleaded before you can remodel. If it has a Lead Cert, you can legally remodel to your heart's content. Clear as mud, right?

@David B. 

Issue #2 on your list is an asset, not a liability. If there's lead paint in the house, or if the current owner gives you the standard "unknown" paperwork, then you can use the lead laws to negotiate a better deal on the property. Figure that it costs 2-5K per unit to delead and count the exterior as a separate unit and you have a ballpark on what it should cost to delead. Since everyone thinks the cost is obnoxiously high, use 5k or more per unit to negotiate. So if it's a 3 family, figure 4 units and say something like "Since it's not deleaded yet, and MA law says I can't rent to families with kids unless I get a lead certificate, it's going to cost over $20k to delead this building, so I can offer you $XXX,XXX for the building."

There are loan programs in MA that allow you to borrow the money to delead and defer the payment until you sell the building, so you only pay for the deleading when you sell the building. So, knowing this, you can buy cheap using the fact that it needs to be deleaded, then sell it for a premium using the fact that it is deleaded to get a higher price, then pay off the deleading loan. So the fact that there are strict lead laws in MA can actually make you money in the long run. Especially if you get lucky and there's not much to delead in the unit and it only costs around 2k per unit.

This goes for all of you MA investors, @Rich N., @Marko Scretchen, @Justin Bioc, @Ryan Short, and @Paul Timmins, if you send me the address of any buildings your interested in I can check it in the database to see if it's been inspected or deleaded yet. It only takes me a minute and you can use that info in your negotiations on the property.

If a building has been inspected, the homeowner cannot do construction until the building has a lead certificate, if they do it'll get flagged for Unauthorized Deleading (UD) and it will never get a lead certificate. You could then jump through hoops and get a "Letter of Environmental Protection", but that will raise your insurance and lower the value of the property, but at least you could legally rent to families. 

It also happens frequently that the property has a unit or two that was inspected in the early 90s the inspector puts in "No Hazards Found", but when you go to have the other units inspected, or to have a PCAD inspection done, they find evidence of deleading. Well, if there were no hazards found on the initial inspection, why was there deleading done? This ends up getting flagged as UD and creating headaches. 

The solution if you have a building that the database says "No Hazards" but there is evidence of deleading is to basically undelead the illegal deleading. which is to say replace the doors that are scraped to 5', replace the door jambs that are scraped, etc.. Sometimes door jambs or other areas are covered with luan, that's to cover lead paint. The luan needs to be removed, exposing that lead paint again. This is legal to do. You're not trying to delead the unit, which would be illegal. What you're doing is removing the illegal deleading, which is legal. When the new inspector comes through, they will find lead paint that will need to be addressed and you then address the issues legally. 

Send me colleague requests and let me know if I can be of any help in the lead paint area. Good luck in your investing! 

@Art Maydan, I don't know Illinois Law but in MA you can't rent to a family with a child under 7 unless you have a lead certificate on file with the state. You also can't discriminate against a family even if it's because there's lead in the unit. Please look up, read, and understand the lead laws for your state. Most states have adopted their own, but if yours hasn't you still need to follow EPA guidelines

As for other members from MA, please don't listen to @Brandon Ingegneri. Just because he does something that is illegal doesn't mean that you should. 

If there has ever been a lead inspection on the unit in the past, what he's suggesting is called Unauthorized Deleading (UD) and it's illegal and will prevent that unit from ever getting a lead certificate. If there was any UD in the common areas then the entire building will be excluded from getting a lead certificate. You can jump through some hoops and get a Letter of Environmental Control so you can rent to families again, but it will lower the value of the property and raise the rate of your insurance.

If the unit never had a lead inspection then you still need to follow the EPA RRP rules. Every contractor that works in the state of MA needs to be RRP certified. 

To just scrape lead paint would not only be dangerous for you, but would create lead dust that would settle throughout the house and end up raising the lead levels of any kids that lived there. Lead poisoning doesn't come from kids eating paint chips, it comes from the dust that gets on everything. When the kids touch that dusty surface and then eat, pick their nose, rub their eyes, or just suck their thumb they end up with high lead levels and you get sued. 

The final phase of a deleading job is for me to clean the entire building. I have to use a HEPA certified shop vac and vacuum from the ceilings to the floors and then wash everything. The lead inspector then comes in and takes dust wipes and sends them to an independent lab. If any of those wipes come back with lead dust on them, I would have to reclean the entire building, they won't tell me which room failed. They are not looking for lead paint chips, they are looking for lead dust. 

Just to show how serious they are about the cleaning process, if I have the wrong Shop-Vac on site I get a $32,500 fine. That is not a typo, it is thirty-two thousand dollars for having the wrong vacuum on site.

So basically, to recap; learn the laws for your state or pay large sums of money in fines and lawsuit payouts.

Ned, in MA you get issued a letter of complience. That absolutely stops a lawsuit. You've done exactly what is required to make the property lead safe for children. That's why the laws exist. 

I always recommend people get a PCAD (Post Complience Assessment Determination) when they turn over a tenant or at reasonable intervals if they have a long term tenant. That way they're sure the unit stays legal and they stay covered. There's no law on the books about PCAD, but I use the term "reasonable intervals". What a judge would deem reasonable is open for discussion.

In my opinion, it's always worth it. You can use the "unknown" status as a negotiating point. It generally costs $3000 to $5000 per unit, counting the exterior as a separate unit. So a 3 family would have 4 "units", the 3 apartments plus the exterior. So knowing that a 3 family could potentially cost you $20,000 to delead, and the MA state law basically says you have to delead (can't rent to families, but can't discriminate against them either), it becomes a strong tool to getting a better deal. 

"Since you've never had a lead inspection done, my offer will reflect the fact that I'll have to delead the building." Then offer $40k less then the ask. You can always negotiate to splitting the cost and still be knocking $20k off the ask. 

As was mentioned, you don't have to delead unless you're renting to a family with kids under 7, but it's best to do it when the building is empty. It saves on labor which saves you money and if there are tenants in place, you need to put them up somewhere for the duration of the project. 

There are loan programs that will help you pay for deleading. MA may be strict, but they want the properties safe, so they do what they can to help. You can see the options here... MA Lead Paint Financing Options and here... Mass Housing Get the Lead Out

Let me know if I can be of any more help.

Derreck

http://www.gencourt.state.nh.us/rsa/html/nhtoc/nhtoc-lv-540.htm

In NH either party can break a lease with a 30 day written notice delivered in the same way the rent was delivered. So if the rent was mailed, the notice should be mailed. But seriously, if it's mutual, then what's the concern?

Sooo, basically it was an illegal addition, that you then were doing illegal work to, and you got caught. That's not rough, that's life. You win some, you lose some.

@Flavio Zanetti I'll address your questions as you have them written...

Same link you posted. You only quoted the part about the anti-discrimination law, which is in fact the last question on that page. Read the rest of the page. This is from the second paragraph... "The Lead Law requires the removal or covering of lead paint hazards in homes built before 1978 where any children under six live. ..." 

Here's the legal speak... 

"460.100: Duty of Owner(s) of Residential Premises (A) Except as provided in 105 CMR 460.100(B) through (D), the owner(s) of a dwelling unit or residential premises containing dangerous levels of lead in any paint, plaster or other accessible structural material are required to obtain a Letter of Full Compliance or a Letter of Interim Control, in the following circumstances: 

(1) A child under six years of age resides therein, whether or not the residential premises have been inspected pursuant to M.G.L. c. 111, § 194 or otherwise; or

... "

Next question...

The lead paint doesn't all get removed. Note the term "Lead Paint Hazards" above. Not all lead paint is considered a hazard. If it's on a flat wall and isn't peeling or chalking, it's not a "hazard" and can be left in place. As for the components that are hazards, there are different methods depending on the specific hazard. The homeowner is responsible for finding suitable housing for the tenants while the deleading work is going on, it can be a hotel or another unit the homeowner might own. These are things we learn when taking classes to get our licenses. For the record, mine is on the Moderate Risk list. MA has three different classes of deleading, low, moderate, and high risk, each with their own limitations. Technically, I'm a "Lead-Safe Renovator Supervisor Approved to Perform Moderate Risk Deleading" which basically means in MA the guys that work under me don't need to get licensed, I just need to be on site when any work is being preformed. 

Next...

You are correct, that's what you quoted above about evicting, you cannot evict instead of deleading. You can't not rent to a family even if it's because you know there's lead paint. You have to delead. 

Next...

Unfortunately, Flavio, you didn't mention encapsulation when you said

which would actually be illegal and dangerous for someone to do.

I'm well aware of what an encapsulate is. I have a can of it right here next to my desk, actually. An encapsulate isn't a paint, it's a special coating that has to be applied to a specific thickness using a special gauge only after a specific test is done to the surface to be encapsulated to be sure the paint is sticking well enough to the wood to be encapsulated. Every component to be encapsulated needs to be tested and the results of the tests documented before the component can be done. You said scrape and repaint, not encapsulate. 

Feel free to ask any other questions you might have, I'll do my best to answer them for you.