All Forum Posts by: Michael Peters

The 5% on repairs and cap ex is just a rule of thumb, but on a larger acquisition your discussing it should most likely be close to accurate if you average all the properties expenses.  I would make sure to run your numbers on each property so you aren't burned after the purchase.  For example a 100+ year old property might require 10% cap ex while one that was built post 2000 might only need 3%.  I'd recommend running the numbers on each individual unit.

I would also make sure to confirm if the owner has pictures, condition catalogs, and deposits prior to close.  If they don't I would make sure to account for larger turn over costs when the current tenants move out since there will be very little you can withhold.  

Did you receive any documents, pictures, or a condition catalog from the previous owner?  Without them most charges wouldn't be held up in court and ethics.  If they are breaking the lease early you can defiantly enforce any provisions or penalties in the lease and hold them responsible for rent until you get a new tenant.

If they are leaving having the additional adults at the property isn't a huge concern.  If they are already giving you issues you could opt to post a 3 day notice to cure or quite citing the lease violation.  You could also opt to give them a shorter move out time frame in exchange for their security deposit.  I would definitely do a walk through prior to getting this agreement in writing citing you expectations on cleaning ect...

Maybe I should clarify a bit.  I already have the itemized deposit disposition and and gone through this roll enough to be covered by local laws.  As much as I would love to fix or replace absolutely everything some items, like the examples above, had to be left as is due to budgetary concerns.  Need to make sure I have reserves in case this were to happen with my next turnover.

@Christopher Phillips repairs included new carpet and repaint throughout a 2,300 sq/ft home and roughly $1,000 to remove junk left by the tenant just to name a few.  The $10,000 also included vacancy that the tenant is responsible up until I placed a new tenant 2 days ago.  This is a large cement driveway and I'd have to resurface the entire thing due to the locations of the burn marks.  Not enough to warrant this but I want to hold them responsible for the damage.  Light fixture is over $150 for materials for 1 of the 2 light bars.  I'd have to replace both plus labor.  

@Theresa Harris was able to get up a good portion of the marker using rubbing alcohol but the finish started to come off so I opted to leave it.  

@Patricia Steiner thanks glad to have them gone.  Never had any issues until they up and left one weekend for another state.  When I found out a week later they claimed they were going through bankruptcy.  Though they don't seem to understand how the process works and what can be forgiven so I'm not concerned about any charges being thrown out.  I'm also fairly certain its just an excuse and not actually happening.  I was able to get carpets professionally cleaned which got up roughly 90% of the stains.  Carpets were new when they moved in.  Charged 100% for the two rooms I had no choice but to replace.  The rest still have some very noticeable stains but enough that I could live with but plan to charge a portion of the cost of new carpets to account for the drastic decrease in their lifespan.  The rest of the cabinets still look great so I can't justify refinishing everything or repainting at this point.  Again planned on a flat charge to go towards new future cabinets.

@Mark H. Porter the claim is definitely over the small claims minimum and after my conversations with the tenant I would most likely have to get a wage garnishment.  They seem to think a bankruptcy is a get out of jail free charge.  

I'm in the middle of creating the deposit disposition for tenants that trashed a property costing roughly $10,000 in damages.  Pictures and the condition catalog back up every line item on the disposition.  I want to know how others handle items that were damaged or broken but are unable to be repaired.  I typically charge for a portion of a complete replacement depending on the age of the item damaged.  In the perfect world I'd fix or replace everything but sometimes its just not an option.  Appreciate your feedback.

Examples:

1. Tenant burned designs into driveway and cement patio using sparklers.

2. Flooring damaged by children finger painting on carpets.  Got most of it up but its still there.  From a total cost picture we opted to keep the "best" rooms.

3. Light bar had multiple bulb attachments broken.  Unable to repair after spending some time on it and parts are not available.  Ended up splitting the 8 working lights between the 2 light bars that typically have 5 each.  Doesn't stick out like a sore thumb but still not what it was.

4. Children drew pictures on side of cabinet with paint or permanent marker.  Unable to remove without stripping the entire cabinet and refinishing.

I assume your lease requires rental insurance?  They put you in a tight spot with that deductible.  I would treat this just like an insurance claim.  You need a detailed list of everything that was damaged with pictures.  I assume you've already walked the property during repairs so you should already have a basic idea as to the value of items in the property and where the damage occurred.  Once you have all the information make your own determination of the value and explain why.  $2,000 is a lot just for water.  How large of a leak are we talking?

Either rent the entire space or don't rent it at all.  By having a communal space you put both your tenants and your belongings at risk.  I've only had bad experiences attempting the sharing method.  If you do turn them down send them a few local low cost storage options to show you can still sympathize.

You could always drop them down to the lowest package possible and ride out their leases.  Won't help you with your tenant-landlord relations, but its certainly an option.  For 4 months max it doesn't sound like a deal breaker if the numbers still work.  Rather then keep the contract in their name after close, which they could very well cancel anyway, I would ask that the owner prepay through the end of each lease at closing.  Contact the local provider to see how they have handled the transition in the past and what your options are.  With multiple offers and an inherited landlord I would try to make this as simple as possible for them.

Regardless of the situation that sounds like a lot of people in the property even if it sat empty for a few months.  Even if the company is used for leverage you have no way of knowing or controlling who is in the property.  There could be someone with past evictions or criminal records that you would otherwise have disqualified.  If you do move forward make sure each person that will be staying there is screened and approved.  I would also ensure your lease stipulates the total number of people who can reside in the property, typically 2x the number of bedrooms.

If you want to be sure I would consult with an attorney.  There are just to many ifs and risks for you in this situation especially if you allow the tenant to proceed and something were to happen.  Is he looking to grow indoors or outside?  I would simply turn him down citing issues with insurance, unnecessary energy usage if you cover utilities, and potential water/fire damage.  Make sure to empathize with his request and thank him for asking you before hand.  If you can demonstrate that you truly deliberated on the request they may be more likely to stick to your decision. 

I manage a few properties with propane heat.  Over the course of a year a tenant typically uses 3/4 of the gas which is roughly $750.  Our lease agreement requires the tenant to keep $1,000 in escrow, starting at move in, to cover the cost of the propane refill.  We're out a few times per year and we refill it when it gets to roughly 50% using funds from the escrow.  If the tenant renews for another year they have to bring the account back up to $1,000 that way we always have funds to cover a refill.

Though I like @Mike S. idea for the wifi if you go that route.