All Forum Posts by: Michael Gansberg

@Atwan Kwan, it's tough to say- in some states, it's the owner's responsibility to exterminate, even the first time. Bedbugs can be different than other pests, like rodents, for example. Sometimes the owner isn't responsible. I always pay for the first extermination, as it can get costly if you leave it in their hands, they screw it up, and it spreads to other units- then it's going to bite you one way or another! But if they bring the bugs back, I terminate their lease and get them the @$&% out.

Step 1: Exterminate(the bugs, not the tenants.) Keep receipts- if they bring bedbugs in again, it should be their responsibility(varies by state, likely.) But definitely don't drag them into court if you haven't yet exterminated, you'll get clobbered.

Step 2: Collect rent. If you stop enjoying them as tenants- which seems like that's occurred- serve notice if they're late, then evict as speedily as possible. Re-rent.

Step 3: Repeat as necessary. Go to the beach, enjoy drink of choice. I recommend the Mai Tai, skip the maraschino cherry, that way you'll live to repeat the above steps many times.

@Rich Baer - don't let that stuff stop you! Go back and get into that house. Your friend has full rights to it(as you suggest,) those kittens could starve to death or freeze(or both) before you get back in. And how will you feel about yourself then? It'll take you years to get past it.

Find an unlocked window, open it, and put a bowl of water and some catfood down inside the house until you can go in and scope things out more carefully. I have very strong feelings about this stuff- I closed on a property once and management found a dead cat inside post-closing. That was 2009, I felt bad about it for a long while. 

@Jeff Bisgier, congratulations on your first purchase. I think you'll do great with it. Here's my advice if you want a nice edge at little cost- go for water and energy efficient appliances. Once you put in water-saving devices, you'll save money for as long as they last(and your tenant will save on water-heating costs.) If you put in LED bulbs, your tenant will have a lower utility bill and will never have to get on a ladder to change bulbs. The way I see it, "pretty" gets tenants in, and "inexpensive bills" keeps them in.

Here's my quick list: .8 gpf toilet(Niagara Stealth at Home Depot,) Niagara Sava Spa 1.75 gpm showerhead, Watersense-labeled faucets, and LED bulbs from either Lighting Ever(LE) or Hyperikon(go for the 2700 K color temperature, and usually 9 watts or so is equivalent to a 60 watt incandescent.) Longer term, a high efficiency heating system and sealing and insulating properly is also a good idea, though I'd get it up and running before worrying about these last items. Energy star ovens and fridges seldom pencil out. 

If you do most of the above, you can advertise your rental as water and energy efficient- most tenants will only care about the money they save, but being environmentally friendly is desirable to some small subset of people. Enjoy! 

MG

I've never liked the RUBS idea, it turns you into the utility. You bill the tenants, they tell you to stuff it, then what? I'd recommend separating whichever aspects of the utilities can be separated. Typically, the electric isn't too hard to separate(hopefully there's no common area- if there is, you'll need a meter for the lighting of the common area.) Similarly, if there's one heating system and you're responsible for heating, you'll need an electric meter for it(along with the natural gas meter, of course.)

On the other hand, if there are two heating systems(one per unit) and no common area, you'll only need two electric meters and two gas meters, assuming the heating systems are natural gas. The electric must be separated with care- you don't want one tenant's lights on another tenant's circuit. It's not a job for a jobber, it's a job for an electrician.

You should also be attentive to the details in the leases. If all utilities are included, you can't change that mid-lease. You can still separate the utilities and change the leases when it's time to renew.

@Steven C. Suarez, I'd turn lemons into lemonade. I checked the rental rates in the neighborhood- those houses might create a pretty decent cash flow if rented properly. Instead of the quick sugar high provided by a flip, why not hang out on Easy Street and collect checks every month?

@Matthew Koch I had that problem once. Tenant had a "guest," which really means "roommate who pays part of the rent," then they started fighting over I didn't care what. Nor did I ask. Then when the relationship soured, the original tenant(hereinafter referred to as "The OT") told me I had to evict their roommate! 

I was intrigued- it was a first for me. So I called the police and explained the situation- they told me that The OT had to go to court to evict the roommate. I had the manager call The OT to say, "Not our problem! Go to court, and welcome to landlording."

Peace & Love,

MG

Evict this guy. Don't even think twice, he's bad news. Here's how to do it- call an attorney who has a bad-a$$ process server. The process server should have a sidearm, considering what's going on here. Many of the servers are ex- or current law enforcement. Let the attorney know exactly what's going on- I mean everything. Then ask how to best evict this POS. Then proceed. Your tenant will call all of the government agencies on you, so be prepared for that. 

You'll get through it.

@Don Antoncich, for your first deal, I'd recommend going solo. For your last deal, it's also probably best to go solo. For your deals in between your first and your last deal, I also think solo is best.

Here are my arguments against a partnership. First, if you choose a friend, it's likely that a bad deal will destroy a friendship, so in partnering with a friend, you risk too much. Now, if you choose someone who isn't a friend, then aren't you trusting someone you don't know with your financial future? If you're thinking of doing that, you may as well buy stocks.

Let's take the partnership case where you are the minority holder(I'm not going into various types of entities here, so insert LLC, TIC, or whatever you please, the type of entity wouldn't change my response.) If you're the minority holder, and you disagree with an action, well- too bad for you, you're the minority holder, so zip it, please. If you're the majority holder, and the minority holder disagrees with an action you're taking, well- too bad for you, 'cause you're gonna get an earful- and are you really getting paid enough for that earful? If you're equal partners and you disagree with an action, well- you guessed it! Too bad for you! But don't worry, you'll probably only have to deal with your partner until you sell the building in five or ten or twenty years...why did Attica just pop into my head?

One of the best things about RE is you can become your own boss- but in a partnership, you must answer to your partner(s). There may come a time when being a lone wolf is self-limiting; maybe when you own 50 to 100(or more) buildings, and banks don't like it when you're the only guy at the top of a very broad ecosystem, because if something happens to you, then the lending bank can have a big problem. But it doesn't sound like you're facing that issue at the moment. But if you ever want to face that issue, I'd recommend staying solo awhile.

Good luck!

@Kyle Bentz, don't go with space heaters, go with electric baseboard. It'll look fine, and since it will only go on once or twice per year, the higher cost of operation won't matter. Plus, they're basically maintenance free-  the resistive heating element has no filters, needs no cleaning. Should last a very long time. Installation costs are reasonable. (Anyone who lives/invests north of Florida, please ignore this post, electric baseboard is probably wrong for you.)