All Forum Posts by: Jeff Copeland

If you want to stay in the tipped position, and you earn more money there anyway, why not just report your tips accurately so they show up on your pay stubs as taxable income?

This is a similar challenge to what many self-employed individuals face: You want to minimize your income for tax purposes, but you need the income to qualify for debt. You can't have your cake and eat it too.

https://www.biggerpockets.com/...

Advance Rent Dangers: 

I second what @Richard F. says - I would confirm the parents have given notice at their current address (or sold their house or whatever) before even considering this. This is a common tactic for applicant with evictions: The parents sign the lease, the daughter moves in, and you get stuck dealing with the consequences. 

You might also revisit your screening criteria and clarify whether one applicant with an eviction can or should disqualify the whole lot. 

A deceased person cannot enter into a contract or convey title to a property, and it's doubtful you could assume the mortgage. In the scenario I described, you'd literally just be making their mortgage payments for them (the lender doesn't care where the money comes from, you just need the loan/account number and a mailing address for payment), in order to buy yourself some time to sort out the probate issue. 

Needless to say, you need to be 100% sure the heirs will play ball, otherwise you'd just be throwing money away. And this already carries a lot of risk, because the outcome and timing of the probate proceedings is unknown, and Cousin Joe could show up out of the blue with a will that left the house to him and blow your plan out of the water. 

In many cases, the heirs just don't want to deal with it, for emotional reasons or whatever. If they aren't fully engaged and willing to see it through, it's a non starter.

Likewise, unless this is the deal of the century with tremendous upside, the juice often isn't worth the squeeze. 

I'd suggest starting with the heirs to see if they need or want help sorting out the probate issue, and determine if, how, and when there's a payday in it for them. From there, your next stop would likely be a probate attorney.

The foreclosure process takes several months (longer in some cases), and it's a court proceeding, so any number of things can stop or stall the process. 

If a property is pending sale, but is also the subject of on going foreclosure proceedings, it could be a short sale, or it could just be an ordinary sale, depending on the value and mortgage balance (with values skyrocketing, there have been very few short sales in recent years). 

Either way, if the transaction does not close prior to the foreclosure auction, the sale is most likely dead. After the foreclosure auction, someone else (either the lender, or another high bidder) will own the property, and the previous owner will no longer have a marketable interest in the property to sell. 

It's also possible for Zillow et al to say "Foreclosure Pending" or something along those line. This has nothing to do with the property being under contract for purchase. The very first step in the foreclosure process in most states is for the lender to file a lis pendens (latin for "litigation pending"). Once that shows up in public records, Zillow and other sites will often show property in "pre-foreclosure" status, but it can take many months between the lis pendens and the foreclosure auction, so pre-foreclosure is a very vague term. These properties could be 18 hours, or 18 months, away from foreclosure. And just because a foreclosure is looming does not mean they are a good deal, or that the owner will play ball.

That sounds about right. Commercial appraisals are much more expensive than residential. 

If you are willing and able to risk the cash, you can almost certainly pay to bring the mortgage current, which would stop the foreclosure. 

That would buy you time to work with the heir(s) and an attorney on the probate process. 

This is not a quick or easy process in most cases, so you may have to continue to carry the mortgage for 6-12 months to make it work, which means it has to have a lot of meat on the bone to be worthwhile. 

To clarify: Did she leave "everything" behind like she hasn't moved out at all? Or just the junk she is not intending to take with her (which is extremely common)?

My money is on 1) She will not remove her stuff, 2) She will not respond, and 3) She will not pay. 

If you operate based on those assumptions, figure what you need to go to get possession. There are generally three ways: Surrender, Abandonment, or Eviction. Your state laws will dictate the definition of each. 

A lot will also ride on what your lease says (if anything) about abandoned belongings: Your tenant gave notice that she was vacating on August 18th. Today is August 19th. Her lease has now expired. What does the lease (and your state law) say about removal, storage, or disposal of abandoned possessions?

To be clear: The ultimate downside risk is that the tenant comes back and sues you for her $20,000 worth of jewelry and $10,000 worth of heirloom china that she claims she left behind. That's why the first thing I suggested you do was contact an attorney in your state and understand the risks. From there, only you can decide how to proceed based on how much risk you're willing to accept (versus how much vacancy you're willing to eat).

But you can't just leave the unit sitting empty for the next six months. You'll have to decide on a course of action, then implement it. 

Full disclosure: I am not an attorney and you should definitely check with one in your area before doing anything. But also keep in mind there is often a "perfect world attorney answer" and a "real world landlord/PM answer", and you have to figure out what the risk is and if it's worth taking possession of the unit. 

But it seems to me that her lease has expired so she no longer has legal possession. 

An option to consider: 

1. If at all possible, get her to tell you in writing she has vacated and surrendered possession. Keep hounding her for this. Make a documented good faith effort to communicate with the tenant (and keep these records, screenshots or whatever). 

2. Document the condition of the unit after lease expiration with pics and video. 

3. Inventory her stuff carefully and put it in storage in case she comes back for it (she probably won't). 

4. Send her any required notices (claim against security deposit, etc), change the locks for real this time, turnover the unit, and move on.

You should be able to charge her (and claim against her security deposit) for removal, disposal, or storage of her personal items, cleaning, damages, etc.

(Pro Tip: The security deposit is often great leverage to get them to respond to you: "Hey, Tenant. I just need to get your forwarding address so we can process your security deposit refund" will often get a quick response!)

If I had a penny for every item tenants left behind when they vacated, I'd already have the financial freedom through real estate we're all seeking!