All Forum Posts by: Nathan Gesner

I manage over 300 rentals and would not do this. They reported a problem, you are doing your best to fix it as quickly as possible.

Their electric bill would have increased even with a functioning AC unit. This means any additional cost would be closer to 1/4 the increase or less.

Your job is to maintain the home. You cannot guarantee that everything will work perfectly every minute of every day and they shouldn't expect it. If they want a lower electric bill they will have to turn off the A/C.

I also agree with looking at previous utility bills as a comparison but I would only do that privately as a cross-check. I wouldn't do it with the tenant because it gives them the false hope that I'll foot the bill.

How necessary is A/C for Indiana?

I live in a "high-desert" area where the humidity is low and the evenings cool off nicely. Air conditioning is nice but over half the homes don't have it and get by just fine. Having A/C makes the home more rentable but it doesn't bring in enough extra rent to justify the expense.

Split A/C may be a great alternative but I would recommend focusing on proper insulation, good doors and windows, and then letting the tenants use their own window units.

You get a better return on your investment if you "leverage" it by putting down a percentage and then let the tenant pay off the mortage, pay for repairs, etc. However, that depends on what level of risk you are comfortable with and what your personal goals are.

I recommend you read some blogs or search the forums for "how much to put down". You can also check some outside sources through a Google search.

Most on this site will put the minimum down, or advocate doing so. I personally think you are wiser to put down 30-50% as a protection against market fluctuations. It's a very personal decision that we can'' possibly answer without knowing everything about you.

Your question is so general that we can't possibly answer it. It's like asking, "What's a good restaurant in America?" Nobody can answer it because we don't know what you like, how many people in your party, do you want to dine in or out, what can you afford, etc.

A "coop" is an enclosure for chickens or other small animals. A "co-op" is a share in a company that owns the real estate which is similar to investing in stocks.

I recommend you start by reading some books and getting a basic understanding of real estate terminology and investing techniques so you can ask questions that make sense.

The law requires you to allow early termination without penalty IF there is an unsafe situation. However, they've provided zero evidence of an unsafe condition. The more likely scenario is that they got caught with three unauthorized dogs and are making something up so they can move to a pet-friendly rental.

They heard a gun shot? More likely a firecracker this time of year. Even if it were a gun shot, there's no evidence it had anything to do with them. 

House is being watched? Where are the pictures or video?

Have they filed a police report? Asked for a no-stalking order, no contact order, or trespass order? Of course not.

They claim the situation is unsafe, yet they haven't even taken the time to call the police and file a simple report so the cops can look into it. That's pretty strong evidence they created a fantasy to escape your lease and no-pet policy.

My response would be simple:

Dear Tenant,

You failed to provide any evidence of an unsafe situation in the home. I can only allow early termination in accordance with the lease.

Sincerely,

Not a fool

Give them two options:

1. One of them volunteers to leave. They negotiate whatever funds exchange hands, sign a termination agreement for that one tenant, and that person leaves; or

2. Kick them both out.

Tell them to make a choice and move forward. One goes or they both go but they can't both stay.

I have a "Remove Tenant" addendum that stipulates who is leaving, when they are leaving, that they give up all rights and responsibilities to the property, and that the deposit remains with me so they have to negotiate finances on their own. It also notifies the remaining tenant that they are fully responsible for rent, the condition of the property, etc.

Hire a real estate agent. The fees for a Buyer's agent are paid by the seller, not by you. If you find one that is experienced in investment property, they will be worth their weight in gold.

It's difficult for someone to hold your hand through this process and answer your questions when we don't know you or the property. Hire a pro and do it right or you may end up regretting it.

I also would not recommend allowing the tenant to do this. You're taking all the risk and the tenant gets the reward.

If you insist, talk to your insurance company and be very clear about what you are doing. I would also require your tenant to carry appropriate insurance with you listed as "additional insured" or "additional interest". This will help protect you and it will ensure you are notified if there is ever a change in coverage or a cancellation of the policy.

Don't do it.

@Katherine Pinkerton your story is a familiar one. Someone buys an investment, expects tenants to be decent people, learns that's not the case, sells the house and swears off real estate forever. 

Over half the rentals I manage are for people that tried it on their own and failed. You don't have to give up! Try hiring a professional property manager that can properly screen, deal with issues, and keep the property at market rate. It's an entirely different experience when you make money and don't have all the headaches.

You can start by going to www.narpm.org and search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start.

1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their different staff qualifications.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 5% management fee but the extra fees can add up to be more than the other company that charges 10% with no add-on fees. Fees should be clearly stated, easy to understand, and justifiable. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate!

4. Review their lease agreement and addendums. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance or problem tenants. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that it is enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact they are complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.

I hope this basic guide helps. If you have specific questions about property management, I'll be happy to help!

Many people threaten to sue but very few actually do it. If they decide to sue, you could negotiate a settlement with them and avoid court. Or you could turn around and sue the agent for malpractice or counter-sue this buyer. While you are considering the cost of defending yourself, they have to consider the cost of coming after you based on a verbal agreement they apparently violated.

Throwing in the towel every time someone threatens to sue would have cost me tens of thousands over the years. I have had many, many threats but have never actually been sued. I believe it's because I refuse to acknowledge threats...and I almost always have evidence to back me up.