All Forum Posts by: Keith N.

I've never done this before, but I think it's a good idea.  Some basic soap, sponges, toilet paper, maybe a potted plant plus a manual explaining where the shut-offs are located would pay dividends. This would only cost a few dollars (and the time to create the manual), gives a better chance of them taking care of the place than not providing these things, and starts a reciprocal good will.  I'm going to look into this!

@Dmitriy Fomichenko, @Jason Yarusi, and @Bryan O., Thanks for your feedback. I don't manage my properties, so that won't work. I'll look into setting up a self-managed IRA for now, and revisit the idea of the solo 401k if I expand into another business that generates active income.

I apologize if this has already been answered.  I tried searching for the answer to my question, but was unable to find it.

I just finished reading the BP book on tax strategies and am interested in setting up a solo 401(k).  One of the requirements is that there must be self-employment income.  I don't sell, flip, wholesale, or have any other income that would be schedule C.  I have 17 units that generate rental income.  I know that rental income isn't subject to self-employment taxes, but is it considered self-employment income for purposes of funding a solo(k)?  I appreciate your help.

• Home Equity Loans/Line of Credits?

The down payment on all but my first and last houses have all been paid from HELOCs.

• Private Money

The last house that I bought was too small for my portfolio lender, so I used cash borrowed from a friend.

• House Hacking

My first house was a 3 plex that I bought as a primary residence and rented out the other 2 units.  I've since added a 4th unit over the garage and still live there.

Are they on month-to-month leases, or longer terms?  If they are on longer term leases, are those leases due to expire/renew?  Since they're good tenants, I imagine you have a good relationship with them.  Set a time to talk, and tell them that you have to start raising the rent to cover your increased expenses. Lay out how much you're raising the rent, explain how often you plan to increase their rent (annually? every 2 years?), and assure them that there will be no surprises.  For long term tenants, I like to raise the rent 1% or 2% each year when they renew their lease.  In my market, that's $5-15 per month, depending on the unit.  I think if tenants know what to expect, and there will be no surprises, they won't balk at increases.  They know that expenses increase.

I just spoke with the tenant, and he told me that the garage was done at the same time as the basement last year, that he would remove it this weekend, and has not touched anything since we had our talk last year.  I haven't been in that garage in a long time, so it's possible he's being truthful.

I told him I'd have my electrician come inspect it after he removed everything and send him the bill.  Overall, they've been good tenants, and we discussed that if this sort of thing happens again, it'll be cause for immediate eviction.  

Thanks for the input, BP!

I'm leaning toward #2 (hire an electrician to restore to previous condition, give them the bill), having them sign an agreement that if they do anything like this again, they agree to immediately vacate the premises (I'd have to run this by my lawyer, but I'm thinking it would appear to them that they are agreeing to evict themselves if they do this again - don't know how much help that would be in court), and informing them there will be regular inspections to verify they haven't violated the lease for a third time.

I've been renting houses and duplexes for almost 12 years now, and this is the first time I've encountered this problem.

I have a 3BR/1BA SFH that 3 guys in their 20's-30's started renting about a year ago. When they first moved in, one of the guys decided he wanted to put his bedroom in the unfinished basement, so without contacting me, he painted the walls, put down carpet, and installed outlets, a ceiling fan, and a switch with romex. I discovered it when I went over there for routine maintenance, and told them that it was:
A) Against their lease to modify the property without my written consent.
B) Illegal to put a bedroom in the basement (insufficient methods of egress).
C) A bad idea, because the basement gets damp with heavy rains.
D) Improperly wired.

I read them the part in the lease that they had verbally agreed to and signed, told them not to try that again, and they agreed to undo their electric work and remove the furniture from the basement.  I thought the problem was behind us.

Today, we were over there replacing the water heater and discovered that they had run electric out to the detached garage.  They had hung track lights, an outlet, and a switch, all run in romex, which was connected to an extension cord that they ran through the door, across a walkway, and plugged into an outlet on the outside of the house.

My first thought was "I don't want to evict them, but they are blatantly disregarding the lease."  I'm concerned about fire hazards and code violations, and the fact that they were very aware that they are not to perform any wiring in the house.  I'm trying to decide how to handle this situation, and thought I would ask the opinions of the BP community.  Do I:

1) Tell them they have a week to restore everything to the way it was, or else I will hire someone to do it and give them the bill.
2) Hire someone to restore everything and give them the bill (without giving them the opportunity to do it themselves)
3) Evict them for willingly and knowingly violating the lease
4) Option 1 or 2, plus tell them there's going to be $100 additional charge per month to cover the cost of a monthly safety inspection to verify they have not modified the house, since they have done so twice.

My fear in having them restore everything without any penalties is that it sends the message that they can try whatever they want and just have to undo it if they get caught.  I want to send the message that posing fire risks is unacceptable.

What are your thoughts?

I agree. If he's a quality tenant that made a one time mistake, it's in your best interest to waive the late fees this time and let him know there may be a late fee next time. As for getting away from checks, all of my tenants (17 units) bring their rent to my bank and deposit it. The bank gives them a receipt and notes the depositor on my statement. I go online and see "Sally Smith $750" or "John Doe $800". Tenants can mail it to the bank or walk it in. They can pay with checks or cash, and the teller is doing the proofreading.

In 2009, I owned a 3 unit building and was thinking of moving to a warmer climate. I decided I'd either sell and move or get serious about REI. It's 6 degrees outside right now, but I have 19 units, mostly duplexes. My plan is to get to 30, pay them off, hand them over to a PM, then spend my winters traveling the south!