All Forum Posts by: Greg Weik

@Kate Cavanaugh, that's interesting that a new construction home will rent for 1.5% of the sales price. 

Are you sure?  Sometimes, I find that new clients get bad information on rental rates, either from a Realtor trying to close a deal or a neighbor who dramatically inflates the actual rental-rate. 

In my experience, new construction is a poor play for a rental property.  When you buy new construction you are always buying at "top of market".  

If you buy new construction, at the top of the market, you will not see any significant appreciation for years to come.  This is why I always advise my clients to look for homes in established neighborhoods, preferably without HOAs.  Owning a rental property - in my opinion - is not about cashflow only.  This is missing the forest for the trees.  

Example: $500,000 new construction home near me rents for $3,000/month.  Meanwhile, a $500,000 home in an established neighborhood rents for $2800/month.  

The new construction home makes $200/month more in cashflow.  The new construction home does not see any appreciation for 5 years.  

Meanwhile, the established neighborhood home appreciates 5% (conservatively)/year.  $525k year 1, $551,250 year 2 and so on.  So that $200/month or $2400/year cashflow on the new construction home is a red herring when compared to $25,000+ in appreciation annually. 

Hope this helps you! 

Time, expense, liability are all reasons to hire a professional property manager.  

The questions matter less than what can be proven via documentation (i.e., income, credit score, reliable rental history.) 

If you're lucky, there might be a PM company that offers free tenant placement and only charges on the monthly rent collected. I would search google reviews of PM companies in the area. 

Time, expense, liability are all reasons to hire a professional property manager.  

The questions matter less than what can be proven via documentation (i.e., income, credit score, reliable rental history.) 

If you're lucky, there might be a PM company that offers free tenant placement and only charges on the monthly rent collected. I would search google reviews of PM companies in the area. 

As others have said, do not have your tenant pay HOA dues (who is the Realtor who suggested this?!)

Market rent is pretty straightforward with all utilities included.  Most websites (Zillow, Facebook Marketplace) have provisions for listing utilities included.  I'd check Zillow for listings in your building since the $525 covers them.  Ultimately, it's worth exactly what someone will pay for it right?  Closely track inquiries and you'll know if you've overshot.  Don't wait more than a week to drop the price if it's quiet out there. 

A word of caution, however, is to never say "all utilities" are included.  You always want to specify that, for example, trash concierge service is not included :) 

Here's how we setup the utility portion of every description paragraph for our listings: 

INCLUDED UTILITIES: Trash Removal.

TENANT PAID UTILITIES: All other utilities paid by tenant.

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Making money while you sleep, making more money each year than the year before, not being tied to the office, or having your income tied to what you do hour-by-hour of your day -- these are normally the promises of a pyramid scheme!  In my world, they are the reality of running a property management company. 

If you have given any thought to becoming a professional in the most stable, most profitable area of real estate, please check out this article and reach out to me to see if we have a franchise available in your city.  https://resrents.com/thoughts-...

I'm glad it worked out for you, I hope she does leave in a timely manner and doesn't damage anything on the way out. 

Letting a tenant out of the lease in a situation like this makes sense, but if it happens again, I would suggest having a more formal process:

-A letter where you clearly state that you have complied with all laws, warranty of habitability, the lease, etc. 

-Tenant has to sign and agree not to disparage you. 

-There should be a finite window for the departure, assuming there is a full lease to be fulfilled/not fulfilled. If the tenant misses the window, you should reserve the right to revoke the offer. 

- Have the tenant sign a Tenant Vacating Agreement, asserting that they waive their right to any possessions inadvertently left behind and that they agree the lease has ended on "X date". 

-Make clear that any damage above ordinary wear and tear (and not the result of any ongoing maintenance issues) can still be claimed against the security deposit.  Whatever your state law is regarding security deposit return timeframes and methods, you should indicate this shall still apply and the clock starts as of the "X date" when you've taken back possession. 

I know it can be easy to think it's all good because the tenant agreed to move out, but in property management, there's always a minefield!

Hi Sara, terminating a month-to-month tenancy can vary by state and by the length of the original lease (it's not always as simple as a 30-day notice, but usually that's all that's required.) 

Do you have a copy of the tenant's lease that you are seeking to terminate?  If there previously was a lease in place and that lease defaulted to m2m, the original lease terms will apply.  The tenant's performance, post lease expiration (rent payments, utility payments, etc.) are constructive evidence of this from a legal perspective.  

There is no formal language typically required on notice to terminate a month-to-month lease (which is any lease that has expired or was not in writing), and you are not required to tell the tenant why you are terminating their lease, either (I recommend you do not volunteer this.)  Reference the date of posting, the tenant's name (and language that addresses "all other occupants"), the property address and certify that the notice has been hand-delivered by you or posted in the tenant's absence.  Take a picture of the posting if not handed to the tenant.  If you have the tenant's cell number, text with them so you have a written trail also (this can come up in court and in my experience, judges are largely accepting of any written communication to paint the context of a situation.) 

You'll need to do a quick search of your state's laws regarding month-to-month leases and review the lease in place, if there is one.  Most likely, you'll need to post or deliver (or possibly email, if there's a lease that allows for it) the notice of termination, with a required vacancy date of 12/31/2020.  

If things go sideways, and the tenant won't leave, be prepared to hire a PM company. 

I agree with the other comments.  Never go to a property to deal with a dispute.  Landlords can get shot in these situations, and you're not a babysitter. 

Related, don't ever go to a property to pick up rent, either. 

Being a landlord is potentially dangerous - never put yourself in harm's way if it can be avoided. 

The real question here is "what does your lease say" with regards to trash cans?  What about payment for trash pick up?  This would be the starting point to resolve this, and in future leases (if your lease is silent on this element) you will likely make sure this is clearly addressed!  

Good luck, sorry you're dealing with drama on your new rental properties.  It usually doesn't go this way.  :) 

@Travis Oakes, one of my employees at my property management company has done exactly this, the house hack. He bought his first home pretty young (23 maybe?) and immediately started renting out the rooms.  

Lucky for him, he works at our company and understands the need for clear policy and procedure and getting everything in writing. 

My advice is to require rent to be paid online - or Venmo - and to not accept paper money.  Create an introductory letter that's friendly but firm.  Let people know this is a business for you and that you have to hold everyone to their written agreements, no matter what. 

Collect security deposits.  This part cannot be overstated.  

Determine how you're going to address damage to common areas.  Determine how you're going to track ordinary wear and tear in the non-common area they are renting. 

I suggest covering utilities; there will never be an even split.  Keep it simple. 

Good luck!  My employee has had a lot of success with this and made some new friends.  

As other posters have stated, always be honest and transparent.  None of this "I'm the property manager" BS.  It's your house and you're offsetting your ownership costs while providing a place to live.  No need to hide that.  

Last thing, your lease.  You have to decide if you want to commit to 12 months with people that you're living with (who you may end up severely disliking) or starting everyone off on a m2m (which I recommend.)  

Hi @David To, have you read your PMA (Property Management Agreement) to see if it specifically states this is allowed?  Usually, a PMA pertains to a single property and the PMA will say whether or not the PM company can charge fees when rent is not being paid. 

Normally, a PMA will state that the management fee is calculated as a flat fee on "rent collected" or a percentage of rent collected. 

@Account Closed, honestly that's kind of BS on your part.  Kicking a client while they're down.  Just because you can do something, doesn't mean you should.  You know full well that the $125 or so is going to mean a lot more to the client (who still has a mortgage and possibly repairs and turnover to worry about) than it means to your company.  

We have a couple of tenants who also have not paid since about mid-summer, but we are working hand-in-hand with those clients to help them get through this storm.  We are not charging them.