All Forum Posts by: Mary Joe

Thanks Ryan. I agree to a certain extent and I won't rule out commercial space in my portfolio.

The problem is that commercial space can go vacant for years before they get filled. Plus if I purchase commercial space, I will not rent to WET businesses such as grocery store or fast food etc, they tend to generate a lot of problems with rodents, sanitation issues, etc.

Thank you all for the feedback.

2 questions:

1) With respect to the $100 per door rule of thumb, it helps to know but this number can be easily manipulated by adjusting the down payment. I am worried I am getting myself a false sense of security when in fact I am just paying too much of a down payment in order to create a cash flow.

So what percentage do most of you put for the down payment? Is there a guideline so that I know I am not using too much of my savings for down payment in order to create a cash flow?

2) How do people manage 10, 20, 50 properties? It sounds overwhelming. I suppose the properties are scattered all over the country so it's not like you can find one management company to take care of all the ppty for you.

Even just the lease agreement alone could be a huge headache, say with 50 properties you will have 50 lease agreements to deal with (assuming all single family homes), so you are talking about one lease renewal or negotiation every week throughout the whole year.

Thanks for the feedback. No I am not drafting the lease agreement myself, absolutely not.

I also learn that you cannot count on your attorney to cover everything for you, so I want to compile a checklist to make sure my attorney has included everything in the lease.

I am not a very trusting person by nature, I would feel more comfortable if I am involved as much as I can.

Thanks Bienes, I will add the SECURITY DEPOSIT RULES. But I think it is governed by state law so even if it is not included in the lease, it is implied.

This post is not about creative real estate deals. I am the conventional "BUY HOLD RENT IT OUT" long term investor.

I am terrified after reading the PROFESSIONAL TENANT FROM HELL sticky post. And on top of that, the 50% rule (which from my experience is very true) plus the hard labor that you need to put in dealing with tenants, is it still worthwhile to get into real estate investments?

I am new here, please correct me if I am wrong. My understanding is that the 50% rule doesn't even include mortgage. So for those who do not own the rental property outright, there will be ZERO left for the landlord after making the monthly mortgage payment.

Since most people have a 15-30 year mortgage, that means most landlords will be working for FREE for 15-30 years before they start seeing some NET PROFITS on the rental ppty. In other words, all that landlords can hope for is pretty much capital appreciation after 15-30 years of hard labor.

If that is the case, wouldn't it be easier to just put the money in REITS and earn 2-3% a year?

BTW, the PROFESSIONAL TENANT FROM HELL stick post is really frightening. I read all the posts in that thread but I do not see a lot of recommendations as to how a landlord can preempt something like that from happening or how to cut the losses promptly.

I could only find 2 recommendations from comments in that thread:

1) do a better job screening the tenant - yes I agree.

2) take photos of the conditions of the ppty before tenant moves in. Well this is fine in most instances, but when dealing with a professional tenant, I am not sure how this is going to help. It sounds like if the tenant knows how to abuse the legal system, he can drag you through the mud for years before you even get to present the photo evidence to the judge.

It sounds like landlords are pretty much at the mercy of the professional tenants if they are unlucky enough to be stuck with one.

So am I missing something? Why are people still so enthusiastic about becoming a real estate investor or landlord? Are there other passive or semi passive investment options out there?

The reason I look into real estate is that I know I can't work forever, there will be a time when I am unable to work and will need to rely on some kind of passive income to support myself. But one bad tenant can wipe out everything you have worked so hard for. Are there other passive or semi passive investment options out there besides real estate?

Hello, can someone tell me where I can find more information about NOTES? Am thinking of being a landlord to generate some passive income but am terrified after reading some tenants from hell stories.

Would appreciate any other passive or semi passive investment ideas.

Thanks
MJ

I am new to this. My goal is to generate steady cash flow through rental properties.

Would it be alright for me to start this thread to compile a checklist for things to remember to include in a Landlord-tenant agreement?

Here are some points I have compiled so far, please continue to add to this thread so that we have a more comprehensive list for a solid landlord-tenant lease agreement.

1) renter's insurance - make it mandatory that tenant must have renter's insurance,

2) late fee - a late fee structure for past due rent,

3) credit report - tenant acknowledges that landlord has the right to report delinquencies to the credit bureau. (not sure if this is true or not, I heard people sue because they were not previously advised that late payment will be reported to the credit bureau).

4) lead paint - lead paint disclosure for older buildings.

5) utilities - if for whatever reason tenant is unable to obtain an account under his or her own name for utilities, the lease will be considered null and void. (I read from another board that the utility company refuses to give a new tenant an account because of past due payments from her previous apartment, and the landlord now stuck paying her utilities because of that).

6) a good indemnity form - tenant agrees to notify you immediately if there are any issues with the property, tenant says will not sue you unless gross negligence by you, or you violated laws, plus if they sue and you were not found guilty, tenant will reimburse for all of your court costs, legal fees, etc. Their real purpose is to deter tenants from frivolous law suits against you. (not sure how many tenants will agree to sign this but I guess worth a try)

7) pets - a very well defined pets policy, must have insurance or certificate for the pet, make sure all the shots were taken, obtain name of the veterinarian for references etc. Better yet, I think a no pets policy would be better.

8) late fee and other charges - Unpaid fees, Late fees, & repair charges for tenant damages automatically become rent due under the terms of this lease. Further, any moneys received are applied first to outstanding late fees, damages and other fees and the remainder is applied to the rent. (I read this one from another board also).

9) Pests - tenant must agree to let exterminators service the property at least once a month (pay for by the landlord of course).

10) pests - I haven't found anything about this yet but it would be nice to include an exit clause or something to protect the landlord from tenants using pests as an excuse for withholding rent.

11) overnight guests - this will be hard to discover but the lease agreement should mention that overnight guests should be limited to a fixed number of days per month.

12) photos of property - before letting the tenant move in, the landlord should take photos of the entire property and ask tenant to initial or sign on the photos to confirm that this is the condition of the property when he or she moves in. This will help the landlord in proving damages to the property later on.

13) surveillance camera - for multi family homes or large properties, the tenant should acknowledge on the lease agreement that he is fully aware that the ppty's common areas is under camera surveillance and will not consider this as invasion of privacy.

14) proof of funds - this will not be on the lease agreement, but I would ask for proof of funds to be submitted along with the application form. I would request to see bank statements from the past 3 months showing a balance of at least 9 times the monthly rent. This will be part of the qualification criteria to rent.

15) existing tenants - do background and credit checks before inheriting existing tenants from a ppty you are planning to purchase. Also ask existing owner to show proof of ontime rental payments before closing on the ppty.

16) occupancy number - how to enforce so that tenants do not turn the ppty into a roaming house ?

17) direct deposit - put in lease agreement that rent will be paid by direct deposit for the monthly.

18) monthly or quarterly inspection or maintenance visit - put in lease agreement that the tenant agress to have the landlord or landlord representation visit the ppty to see if anything needs to be repaired or upgraded, also a good opportunity to check if the premises are well maintained and have not exceeded the occupancy limit.

19) Eviction - Put in the lease that eviction will be filed by the 5th of the month if rent is not paid.

This is what I have compiled now after reading the posts, please feel free to add anything that is worth including in the lease or rental agreement. Much appreciated.