All Forum Posts by: Joe Splitrock

Thanks, I will re-listen to that podcast.

 Are you saying he wouldn't accept personal guarantees or that he wouldn't follow through on taking personal property? I guess I don't see this as black and white. In other words, he could request a personal guarantee as a way to make sure the tenant didn't just walk away for no reason. If the tenant feels they have nothing to loose, there is no incentive. He would not need to sue them if something went wrong. I have had situations in the past where I chose not to sue someone for money I was obligated either because they had hardship or because I felt I would never get the money anyways. My point is just that having an option to do something doesn't mean you need to do it.

I fully agree that deposits are not profit centers. I have said that exact statement more than once. In fact, I often give back more deposit than I should if I feel there was a serious effort to leave the property in good condition. If you are in business for the long haul, you have to treat your customers right. Tenants are your customers and your good or bad reputation will spread.

@Sean Robinsonand @Marco SantarelliI am new to the idea of turnkey. I have owned and managed my own property local for over 10 years. As I understand turnkey, someone buys a property, rehabs it, rents it and then sells it to an owner. Often the turnkey also manages. What I didn't understand is Marco said they fired the turnkey, so if Norada is not the turnkey provider, how do they fit into this?

In this deal, there is a rehab company, a turnkey company, Norada, property management and Sean the owner. That is five people making money off this deal. It seems logical by the time it gets to Sean that it could be a little slim or there could be a couple problems.

I am not passing judgment on Norada or Marco. Marco seems intent on fixing this. My advice to Sean would be to not slam Norada in a post as long as they are working in good faith to correct. If you alienate the people trying to help you, they will stop trying to help you. Be patient but persistent.

@Account Closed how did the plumber make the drain worse? How much money are we talking?

Most people have clauses in their leases that state tenant must report items needing repair rather than fixing them. Usually it also says they would be responsible for damage they cause, so in theory this would be his responsibility to pay. I would consider how good the tenant is and how much money the repair is and decide if it is worth going after him for the money. He was trying to fix the problem for you, so he could be unhappy if you send him a bill. Worst case he refused to pay or starts looking for a new place to rent, so you decide what makes sense.

At a minimum you should let him know what damage occurred and the cost. Tell him in the future he would be charged.

@Ralph R.when a tenant signs a lease we give them a list with all utilities with phone numbers. We tell them to call a couple days prior to move-in and set the utility change date for the first day of their lease. On the day of move-in we call the utilities to verify that tenants changed over billing. It takes 5 minutes per utility to do this. This is part of our standard procedure for tenant move in. Almost every tenant has at least one utility that has not been switched. They always say they planned to call them that day. How does the saying go? Trust but verify.

@Tim Johnsonit doesn't surprise me people are forgiving because it is pot. Many people are more tolerant of pot than even cigarettes. Pot arguably smells better, but that is besides the point. People confuse their personal feelings about legalization with the fact that as a landlord you cannot have illegal activities in your property. I am in total agreement that you did the right thing asking him to leave. If he stayed, you could run good tenants out or attract more illegal activity, neither is good for you as the landlord.

I would only take money from the security deposit to remedy actual damage which could include odors if there are any. Lets say you keep his money for finding the pot. He is unlikely to challenge you in court because that would be admitting to something illegal. Or he could challenge you and then you are stuck proving he had pot in the property. Have you called the police? Is the pot in your possession? Do you plan to keep it as evidence? This whole thing rapidly deteriorates into a mess. The worst case would be that you keep his money and he gets mad and retaliates by damaging your property.

My advice is to throw the pot in the garbage and don't ever discuss it with the guy. Handle his deposit based on the condition of the property. Don't call the police or do anything that sucks you into some drawn-out drama. You are running a business, not fighting a moral crusade. Find the path of least risk for yourself and move on.

Good luck!

@Michelle T.my advice would be to rent it, but I do not know your local market our your ability/interest in dealing with tenants. Renting has several benefits beyond monthly cash flow.

- Tenant is making your payment and getting you equity in the property.

- Property value and rents typically increase over time so if you can hold on 5 or 10 years you can either sell it for profit or see rents increase and make more money monthly.

- You claim depreciation and interest expense on your taxes. You may take a loss on paper even though you cash flow each month. That loss is deductible from your primary income and can reduce your taxes. My first couple properties I always had a loss.

- There are probably other things you can claim on your taxes when managing your rental. For example some portion of your cell phone bill. Talk to an accountant to see what all you qualify for.

Bottom line is renting properties is great if you can handle it. I have no experience with leasing so no opinion. Selling at a loss can be a good option if you just need to be done with it. It is better to take the loss (and education) rather than make it worse by renting or leasing when that is not a good fit for you.

I don't know you so, it is hard to tell you what to do, but do what you feel is right for yourself and your situation.

@Brian Jurvelinit is common for a tenant to be responsible for small maintenance expenses. For example items such as light bulbs, batteries in the smoke detector or furnace filters. Tenants will also usually be responsible for maintenance items such as lawn care. These items are maintenance to keep the property in the condition you found it. The grey area is when a landlord requires you to cover repairs. This becomes a problem because typically items fail due to age or acts of God. For example the water heater could be 15 years old with an expected life of 10 years. Then you move in and it pops a leak. Now you are being charged $250 of a $1000 repair for an item was beyond its useful life. A tree could fall in your yard after a storm and now you are spending $250 to clean it up. Those are just a couple examples. You can expect at least one event in a year and maybe more.

The type of landlord that put clauses like this in their lease is going to be hard to rent from. They will raise your rent every year. When you move out, they will take any security deposit deduction they can. If your rent shows up a day late, they will have zero understanding. This is an indictor of this landlords mentality and you found a bad one.

Landlords with clauses like this are short sighted. It discourages tenants from reporting problems. If a tenant knows it will cost them $250 to fix a furnace, why would they report a problem? Not fixing a problem usually leads to a worse problem, so as @Philip McCollumpointed out a $300 repair just became a $3000 issue. 

Landlords can find themselves in legal trouble with a policy like this. For example you could end up paying $250 to replace a stove that was 15 years old and cost the landlord $350 to replace. On their taxes they depreciate the appliance over 5 years. The problem is you paid 71% of the value on an item that was 10 years past its useful life. Your rent is supposed to cover normal wear and use on items, so unless you broke the stove, you should not be paying for it. Even if you broke the stove, it is legally challenging to charge you FULL replacement cost because the item was not new. It is like when you get in a car accident. You are not responsible for the cost of buying the person you hit a new car, only replacing it with comparable.

I would find a different place to rent. Even if he takes the clause out, this is a warning sign showing you the kind of landlord you are dealing with.

Good luck and remember there are great landlords out there!

@Account Closedthere is an organization called the Federal Power Commission and there an organization that governs weights and measures. I will agree most utilities are governed at the state level but the federal government regulates too. Meter accuracy is of interest to the weights and measures groups to make sure you accurately bill someone. Federal government may not be the primary concern here, but they do regulate.

http://www.ferc.gov/students/ferc/history.asp

 In my experience people decide to move in the middle to later part of the month. They start looking for a place and want to give notice by the end of the month. For that reason typically the beginning of the month is slower for renting. That is not true in all cases. People look and move at all times of the month. My best advice is focus on finding the best tenant and try not to worry about letting your property sit for a month. I have rushed to rent in the past and settled for a less than ideal candidate, which can cost you more in the long run. It is a balance. Having rental rules established makes it easier because either they meet the criteria or they don't. That way you are not over thinking it.