All Forum Posts by: Stirling Gardner

Josh is right on this. You have to be firm no matter how much you like the person or how much you believe them. If they don't pay by the end of the grace period, you need to immediately serve them a 3 day notice. It's not just about being tough - it's about your money. And every day you delay the initial warnings/notices is another day IF you end up having to evict, that you lose rent income. You can do this with or without an attorney.

I would like to turn you on to two resources: www.HUD.gov - the search for your state. This will list every legality and tell you what your rights are, what his rights are and empower you greatly.

As mentioned above, any time you add a Lease to Purchase option to a residential lease agreement, you need to have an attorney look over your documents. The last thing you want is to be stuck with this property or not be able to free it to your tenants!

Nick,
There are a number of resources you can check out for free.
You will definitely want to familiarize yourself with the tenant/landlord laws for Michigan when it comes to your residential lease agreement. You can simply go to www.hud.gov and search for MI.

Best of luck!

As everyone is stating, I believe your bank a) didn't explain themselves properly or b) didn't think you have enough equity (based on probably a computerized appraisal or area comps) to justify the Equity line you were asking for.

You can always refi a rental property... or take out a HELOC - it is no different than your primary residence as long as the numbers check out.

You can always use the hud.gov website and look up the landlord/tenant laws for NY... I will say that I disagree with keeping the long term tenants if they are that much below market rent. I don't have anything personally against any of the other posters or whoever may be living there now, but don't let the fear of not being able to find other renters scare you into losing money.

Yes, I am all about favoring long-term tenants, but it is much easier to do when they aren't 40% under market rate... if you are against moving them out... probably do better buying another property.

Or you could split the difference if there are no rent control ordinances in place and let them know you value them and want to keep them, but are going to raise their rent by such and such a month until it is at market... unusual, but might strike a win-win.

Joe,

The amount of energy and money you will have to put in to appeal a HUD decision will drive you crazy... and you can't make money going forward while trying to get money that is behind you...

Good luck either way!

Thanks for the quality article, Toney!

Too often people are so excited that they have found ANY property and that they can afford it these days that they don't take the time to consider everything you have stated in your article.

One big newbie mistake and you can ruin your landlording future for the rest of your life.

The only thing I would tack on to the end of your article (if you don't mind me saying so) is to make sure AFTER you have selected a great property and are ready to rent it, that you have someone that REALLY knows what they are doing to mentor you through the actual rental process... making sure all of your docs: application forms, lease agreements are legal for the state their property is in and not inadvertently violating HUD laws.

I agree with both of these guys and hopefully this won't sound as harsh as it may come across... I know this woman is in a rough spot (from your description), but do not make a renting decision from your emotions... it will come back to bite you in one way or the other.

You should have your own 'qualifying criteria' and one of those should be that the renter grosses 3x the amount of rent every month.

And I am unclear if that is a rental judgment that has been paid or if she was evicted... it is possible but would be really rare for their to be a 'rental judgment' on her credit report without it having gone to court.

AND if she still has medical bills to pay, it seems like you are putting yourself in a dangerous place.

AND, yes, you would have to go through the normal eviction route costing you more money, time and hassle...

I know it's easier said than done, but save yourself from the hassle and find someone else.

Oh yeah, and you are entitled to ask the prospective tenant for income verification (last year's top sheet from her taxes or a current paycheck stub)... from there, you can call the employer to make sure her story on her credit report (length of employment and income) match what her employer says.

Although not particularly ethical, he didn't do anything illegal. As soon as the foreclosure is official and the title goes back into the bank's hands, your lease agreement is null and void. Very few banks have programs set up to manage their foreclosed property (which is costing them millions), but some do (I believe Fannie and Freddy are two that do)... try to connect with the bank directly and see if you can work out an arrangement.

It's a bummer, but I wouldn't waste my energy pursuing anything in court.

Good call. That is exactly what I was going to suggest. It always looks good on the rental offer to have appliances - no one wants to move or haul giant pieces like that.

And if they want them to work, then they will have to take care of them! :)