All Forum Posts by: Greg Weik

@Linda Thomas The lease should never be a secret.  Always volunteer this - it's a contract that binds both parties and it's important to be transparent about your terms.

Pro tip from RES, this is the order of operations:

-Pre-screen before showing to confirm income, move date, pets, credit score, and virtual tour has been viewed. 

-Showing in person

-Application

-If the application is approved (credit, income, rental history, background check all pass), email them your standard lease template with an approval template explaining the next steps (they pay a holding fee).  The lease template is so they are aware of standard clauses for the property and avoids back and forth. 

-Applicant pays a holding fee equal to one month's rent to secure the property. This is the quid-pro-quo for you to take the property off the market and tell other people it's rented.  This can happen before the lease signing, provided you carefully explain your protocol in writing (best if this is in your application) with the holding fee: it's non-refundable after a certain period of time (72 hours for us, but $500 is immediately non-refundable if they change their mind in <72 hrs) if an applicant changes their mind about leasing the property.  The HF becomes a credit towards move-in (security deposit) once the lease is signed. 

-Why this process works:  even if you have a fast DocuSign process (as we do), you don't want to take the time to prepare a lease for a "merely approved" applicant who may have applied to multiple places and may have no real intention of renting your place.  Once they pay the HF, you're off and running.  The tenant has seen the lease, knows the process, and no one is wasting their time.

Our holding fee back out rate is less than .2%. 

@Jayne Florez Just because something is in a contract, doesn't mean it's enforceable.  It's not at all uncommon for contracts to contain clauses that are not enforceable. 

Ultimately, if you end up in court, a judge will decide whether a particular contract or clause in a contract is enforceable.  There's a lot to this analysis and it's been a while since I took contract law in law school.  Negligence on the part of the PMC or its agents, and subsequent damages and culpability, is something that I cannot imagine a scenario where it could be contractually pushed onto another party (you). 

That being said, yes, have an attorney review the PMC's contract.  I suspect the language is not as draconian as you may believe.

Hi @Jacob Beran, this is an all-too-common situation with roommates.  

Unless there is a legal situation afoot, such as domestic violence, or a situation such as military with PCS orders, the short answer is you're not required to change or terminate the contract.  I just want to set the table with that as a starting point. 

The entire point of a contract is that the parties agree to uphold the 4-corners of it, even if their personal circumstances change.  This is why we have contracts, so someone's personal situation is not grounds to re-visit the terms and/or alter them. 

If you choose to consider (not allow outright) a roommate change, I would suggest charging a not-insubstantial fee.  We charge $200, and require very specific documents to be completed. 

Some food for thought:  

-the new roommate is signing onto the original lease, and that means the original condition of the property.  What if the departing roommate caused or contributed to damage that is currently present in the property?  This is exactly the kind of legal "in the weeds" stuff that can come up with roommate replacements. 

-who paid the security deposit?  Is your lease clear on how security deposit disposition is handled? 

In short, to successfully change out roommates, you need the following:

-a solid release, that everyone agrees to. We call this a TVA or Tenant Vacating Agreement.  The vacating tenant releases all right to the property, any items left behind, and releases all right to the security deposit. All tenants sign.

-you need to change the locks or digital door code.  Liability. 

-you need a TAA or Tenant Addition Addendum, that the new tenant and current tenant sign.  This has to have language about what the new T is signing onto and agreeing to. 

-I suggest having the new T also sign your original lease. 

Alternatively, just say not to the T who wants to leave.  Tell them they are on the lease until it ends and you intend to hold them liable for the contract they signed. Depending on the situation, you can float lease termination to the remaining tenant and simply try again with new tenants if the remaining tenant agrees to it. 

Hope this helps.  A good PMC will have processes in place to deal with this kind of scenario. 

I can't tell if this is a "strategy" question or a "morality" question. 

As a property manager with over 15 years in the business, my clients have run the range from "Let me call my buddy to just put duct tape on it" to "Spare no expense, I want my tenants happy at any price."  The clients in the former camp would never admit they are slumlords and the clients in the latter camp would never admit they are throwing away money. 

Somewhere in the middle, is a happy medium, I think, as an investor.  Not exactly in the middle, though.  Closer to the "keep the tenants happy and keep the property excellent" camp is the best strategy and happens to check the morality box as well.  Some will disagree with me, but I probably would not manage their properties.  :) 

My personal approach:  I buy single-family homes as rentals.  Most of them are nicer than the houses my friends and family live in.  They're big, updated, and in very nice neighborhoods.  For me, this is more strategy than it is morality.  Feel free to DM me if you want to know my thoughts on this - it seems to go against the grain of a lot of what I see here on BP.  Ultimately, I'm here to make money and build wealth.  If a tenant wants to pay $3400/month in rent, I'm not going to get in their way. 

@Noah Harper Sorry you're dealing with this, what a pain.

As a licensed Real Estate Broker, I do not believe the previous sellers had a duty to disclose the fact that your neighbors are noisy. I'm not an attorney (though I do have a legal background), but this is not a material defect.  It's not listed as one of the domains of disclosure to new buyers, nor should it be.  It's not a permanent, immutable fact, and human behavior can change at any time.  

In short, I would not burden your conscience with volunteering that your neighbors can be noisy.  My neighbors routinely have late-night parties in their backyard that are loud and go on later than my wife and I would like, and that situation is indistinguishable from your neighbors having a religious ceremony.  Noise is noise. 

I applaud you for doing the right thing and speaking with your neighbors first.  Honestly, they sound like jerks.  Being "legally allowed" to do something doesn't make you a complete jerk for disregarding the quiet enjoyment of your neighbors.  Are they owners or renters?  If they are renters, I may have a proposed avenue to resolve this. 

I think your best next step is to actually consult an attorney.  The attorney will likely advise you to document each and every situation, whereby the neighbors are creating a nuisance.  Document the time, and the duration, and document your requests for them to cease the noise past a certain time of the evening.  From there, a good attorney will likely propose possible strategies to move forward.  

Tough though it may be, I would not give in and sell.  Especially now, with the market cooling as much as it has.  

@Kyle Curtin I think this analysis is good, but ultimately, as @Nathan Gesner alluded to, this determination will come down to how you value your time. 

In the beginning, money will be tight - you won't technically be "worth" as much.  Do more yourself. 

As you become more successful and objectively "worth more", your time is better spent on higher ROI endeavors or simply enjoying the free time you've earned.

I know there are people who are objectively very wealthy, and still for them penny-pinching is a way of life.  It's an ideology at that point for some people. 

I'm definitely in Nathan's camp (other than owning fewer rentals than him! :) ).  Life is short, if you've built something you can use to enjoy life, use it to enjoy life.  Delegate everything that can be delegated (which is not to say you should not hold others accountable for what they've been delegated.)  My PMC also manages my rentals, I pay them, and I get no special treatment.  I'm just another client in the system.  

Quote from @Jordan Malara:

@Terry Phillips I use @Greg Weik and his team for my properties in the Springs. I'd highly recommend them!

 Thanks @Jordan Malara!  

@Terry Phillips we would be happy to chat with you and see if RES can help you out. Please feel free to contact us via my signature or 1:1 here on BP.  

That's a long way of saying you should always enforce the contract to the letter. 

In Colorado, as a licensed broker and an owner of a PMC as well as rental properties, I am required to disclose to tenants that I am the owner of the property.  With my rental houses, if I am showing them to a prospective tenant or stopping by to check on a repair issue, I have no trouble with the tenants knowing I also own the property as well as owning the property management company. 

I would never advocate for lying and saying I'm "just the property manager" to avoid a difficult conversation.  When tenants want to break their lease, they are held to the agreement they signed at the outset - the lease.  The improper termination fee is clearly spelled out. 

I think a better approach for not giving tenants special treatment is this (which is what we do):

"We cannot change the terms of your contract and give you special treatment simply because of your individual circumstances.  If we were to give you special treatment but not someone else with similar but less compelling circumstances, we could easily be sued for discrimination."  This explanation has never been challenged, because it's authentic and tenants understand at that point, that exceptions - while they may initially seem like a "reasonable request"- are anything but reasonable when put into the full context of scalable operations.

Quote from @Joe Chirdon:

Situation: I'm a Realtor. My client owns a property in Steelton Pennsylvania that he needs to sell. Two of the tenants have changed the locks and will not let potential buyers in (they pay their rents). The owner says they are hoarders. The owner's leases are DIY one-page agreements that don't have the 24 hour notice for access clause. I suggested that if he can't get keys and they refuse to let anyone in, his only option would be to evict them. The owner claims he spoke with a district justice who said there is no cause of action for an eviction. I'd love to hear your thoughts on the best way to get these two tenants to cooperate and/or get out. 

Non-renew the leases and sell when the units are vacant.  Selling with hoarders in place probably isn't going to fetch top-of-market pricing. In the future, maybe your client will consider hiring a professional manager with a real lease.  The cost of education is never free. 

Quote from @Kelley Webber:

Hi There! I am completely new to real estate investing and just became a pro member on the bigger pockets website. I have read many books, listed to many blogs, and am ready to purchase my first investment. I have Virginia roots but am based in Colorado. I am a mountain girl and have seen the small mountain towns in Colorado blow up the past several years. I have been to Roanoke several times and see it as an up and coming Mountain town in Appalachia. And real estate is so much more affordable there compared to Colorado. I think it could be a promising area but still uncertain as this is all new to me.

Anyone out there experienced in Roanoke real estate investing?  Any thoughts for a first time investor in the area?

Thanks so much!

 @Kelley Webber I'm in CO and also have VA roots (NoVA/Falls Church) but I'm curious as to why you would not try to invest in CO? Yes, it is more expensive. If budget precludes investing in CO, then I understand, but many parts of CO have (and likely will continue to have) very strong appreciation. Plus, it's a local investment and easier for you to manage.

Appreciation of an expensive property builds wealth faster than appreciation of less-expensive properties.  10% on a $500k house is $50k.  That same market, 10% on a $200k house is only $20k.