All Forum Posts by: JJ P.

Is it still managed by the property manager?  If so, then they should be making the deductions based on walk through or move out inspection, provide the tenant and owner a written list of issues observed at move out, and deduct the amount that the cleaning/repairs will cost from the security deposit.   What's happened so far?  Who has the deposit, who paid for the damages, and who is asking the tenant for more money for damages?  Were repairs made?  Did you inspect the property with an awareness of the damages?    Since this all happened months ago, it should have progressed somehow.  

Since you're new at this, I'll clue you in that basically the deposit is all you'll get from a tenant without going to court.  If you go to court and win, you still need to collect the money, which can be tough.  

If the deposit transferred to you, it is called Estoppel or Tenant Estoppel.   Yes, the money belongs to the tenant, but it is held by the owner/management company against the damage free return of the property.  The money does NOT belong to the former owner.  Where I see a problem looming is if the money is still in the hands of the former owner, there are damages that need to paid for, and you're left holding the bag.   Also there might be issues if no one is sure when damage occurred.   It was most likely there 6 days ago when the other people owned it, but was it there before the tenants moved in? 

Just out of curiosity, did you know in advance that they were moving out?  The cleaner purchase transaction would have been to hold off closing escrow until the property was vacant.   Then you could have just skipped the hassle of an exiting tenant and done a walk through inspection of an empty house.   I just suspect that you were taken advantage of in this... the sellers/flippers were your agents also, and did not act in a fudiciary manner on your behalf.  I suspect you probably signed off on an inspection or "final walk through" that basically says you accept the property as seen.  You already gave up your biggest bargaining chip...closing escrow and buying the house.  You may or may not have signed off on the tenant deposit, but as stated above, it's not really yours, just held by you.  

Not to burst anyone's bubble, but saying "there's no way that these properties are worth this much" is ignoring the obvious.  Multiple people tried to pay that much or nearly so, as evidenced by the bid up and the sales price.   The comps will follow the sales price.   

I once had a homebuying client who spent the first few months of his home shopping making offers that were somewhat tied to the purchase price of the property.  He'd make comments like "They should be happy making XXX over what they paid for the place."   He didn't get an accepted offer until he moved on from that point of view.   That is simply not a viable or rational strategy.   Apple or Amazon won't sell me a couple of shares based on what they were worth in the past-- choose any moment on the timeline-- last week, last year, 20 years ago--- it simply doesn't matter.  

Up thread I mentioned my grandma's beach house... the one she didn't want to buy because it was so expensive at $16,000.   The market moved the value of the house.   The market will move the value of today's houses and stocks.   The prices will rise and fall based on forces bigger than we are.   So, make a purchase that works for you based on a thoughtful investigation of the data that you have available to you.  If that means changing markets, buying a fixer, buying a condo-- something should make sense and that's the one you should buy.  

We allow pets and charge per month, per pet.  We absolutely charge, screen and add addendums for pets.  We consider the monthly fee to be about even with the extra wear and tear.   But, young children are hard on homes, also-- think crayons and milk spills-- so in some ways a pet isn't so bad.   We require a deep, professional carpet cleaning, door jamb and baseboard cleaning, and window track cleaning upon move out from all tenants, pet owners or not.   If they don't do this, we will pass along the cleaning fees by taking them out of the deposit.   We no longer hesitate to withdraw from the deposit any fees that are needed to restore our home to it's prior condition.  

Before we wrote it into the contract, we learned the hard way.  We've had tenants add pets one by one until there's just too many.   Once, one lady rescued a litter of abandoned puppies and they grew into teenagers at our house.  These were big dogs and obviously got potty trained on our flooring.  We charged for our costs on that move out.   I would not want a chained dog tethered outside in any of our units and would send a notice if that happened.  

 I don't mind an older trained pet, especially if the owners are home a lot.  A pet owner that is clean, works from home, and dotes over their precious furry family member is welcome in any of our rentals.  That's not a high risk pet.   If we have an applicant such as a retired couple, stable income, with an older dog or two, they are moved in without further ado! 

Disclaimer, firstly, I'm in San Diego County, and it's an amazing place to live.  There's neither dog poop or people poop problems in 95% of the County.  The La Jolla people are really complaining about the seals and sea lion poop, but that's a whole other story....

  Problem tenants come in all shapes and sizes, but I'd immediately repair the door, send her the bill, and send her a written notice that she is violating the terms of the lease by disturbing the neighborhood and damaging property.   You could either terminate the lease based on that, or give her warning that if she doesn't Cease and Desist such behavior, another violation will result in the lease termination.  

Personally, I'm with @Nathan G.,  I'd terminate the lease.   I suspect this behavior is just the tip of the iceberg and it's not going to improve based on one more chance.  A crazy tenant can really rack up a tremendous amount of damage to a house.  A mad, crazy drunk tenant could do just about anything.  Ditch the kooks and get somebody else in. If you wrote 2 lease contracts (hers and the roommates), perhaps you could just terminate hers.   The roommate might be eager for a change, also.   If you wrote them both on the same contract, that wouldn't be an option.  A lease termination only turns to an eviction if/when they refuse to vacate.  

Sometimes a small cash for keys arrangement could be made, just to facilitate a peaceful and timely exit and will cost less in in the long run... less  lost income and eviction expenses, than a court case would. 

@Jill F

When a unit is as nice as yours is, well kept and updated, and decently priced for the neighborhood, there will always be high demand.   The underscore of a nice, clean unit says to tenants "I am not a slumlord, I care about my home/your home."  

When we first started renting, we had the strategy that our rents would be low and we expected the tenants to more or less appreciate the low rent and not bother us too much.  We even did some trades back then, barters such as knocking off a bit of rent for handyman services, cleaning or painting.   This strategy is an abject failure.  The TENANTS feel underappreciated.  They resent paying you.  The less they paid, the more they expected.  They over charge and over rate their their barters, such as sloppy paint job or poor clean up.  They want you to discount the rent or pay them for top dollar for any little thing.  We used to joke about one tenant that he'd charge us $20 to walk across the street.    In a nutshell, this strategy got us nothing but entitled tenants looking for ways to screw us.  

 Fast forward to today- we have many more rentals, and an entirely different strategy.  Our places are immaculate and well kept.  If something is broken, we fix it.  We hand over a clean property and expect a clean property returned to us. We have nice properties and absolutely amazing tenants.  They appreciate us and we appreciate them.  We don't barter with anyone, and nobody is nickling and diming us.  

You've got what sounds like one of the nicest places for rent in the area.  Pick a tenant that will value that. 

Personally, I think leverage is good up to a point.  When you're building wealth, it's a scrappier time of life.  You'll put in more sweat equity; take on projects with more variables; leverage more; self manage; etc.  

 When your portfolio reaches YOUR magic number, I think it's time for you to fine tune it.  If you're after better cash flow, get your pencil out and see the ways that your portfolio could make that happen for you. If I hit that number,  personally I wouldn't keep expanding and leveraging.  Spending money from loans is a very traditional recipe for disaster.  I'd look more towards cutting costs and increasing cash flow in traditional manners and balancing the income/outgo.  Check for savings on insurance? Utilities?  Rent increases?  

  For us, hitting the magic number meant outsourcing some (a small percentage) of the work\management; 1031 exchange to diversify and increase cash flow; and sell the ones we didn't like.  

It also meant paying off the final mortgage, so that $1500 payment a month is now  cash flow that stays in our pocket. Our Bigger Pockets, ha ha!   We raised a couple of rents and between the two, there's an easy peasy way to have an extra 24K a year in those bigger pockets of ours.   Leverage is great, but to me, the end goal is being debt free and financially independent, not endless leveraged expansion.  With leverage, you will always have that high overhead to juggle.  

My motto has been for years:  When you loan money to friends, you lose the friend and the money.  Don't do it!  

My daughter is a nurse, and she uses Furnished Finder.  

Great post.  I would also add that the furnishing will have a direct effect on your returns.   If everything is brown and boring, you'll get less interest and less bookings than something that features a bit more eye candy.  

This!  My friends and I passed on so many deals 10 years ago over $10K or less price differences.   Now the difference would have been $140K in appreciation or $150K.  

I would just point out that if house hacking of any sort is part of your strategy, be sure to get at least 3 bedrooms.