All Forum Posts by: Nathan Gesner

i also recommend www.nolo.com which has a ton of information and slecific, current laws by state. They have a book called "Every Landlord's Legal Guide to Managing Property" and it is one of the single best books you could buy as a new Landlord. I bought it with my first investment property and bought an updated version six years later when I became a REALTOR. It does a great job of covering marketing, screening, managing, contracts, state laws, Federal laws, and more. I believe they still include a lot of forms that come in handy.

You can see state requirements HERE

According to your profile, you have no experience in real estate or property management. Do you know why so many people refuse to own rentals? Because they don't know what they are doing, they get into trouble, and then they run away with their tail tucked between their legs!

I recommend getting licensed and working for a property manager for at least a year before you try breaking off on your own. This will give you the training and experience, plus you'll find out if you even like it. If not, move over to sales and count your blessings. If you do like it, then you can put a plan in place to start your own company.

Keep in mind, you typically have to have a Broker's license to open your own company and those take two years or more to earn. The other option is to be a licensed PM  and work under another Broker, but then you have to share some of your spoils.

Here's a guide put out by King County in 2007. Check to see if it is current.

CLICK HERE

I don't think your commercial unit and primary residence have anything to do with whether you fall under Fair Housing but you it is generally wise for you to adhere to their requirements to keep yourself out of trouble.

I don't understand how turning one room into an office solves anything. First, it would be an expense. Second, it would reduce the amount you could charge for rent. Third, it would reduce the marketability of the home. Fourth, how does it stop a family of six moving into a one-bedroom unit and using the office and living room for people to sleep?

Nope! I understood. We're just victims of miscommunication via a message board! 

@Nicole A. I only owned the company for a few weeks when I started calling to schedule inspections. I had over 100 rentals to inspect while simultaneously fixing the accounting, the forms, missing files, etc. The company was a mess, so I couldn't dedicate my time to inspecting this one house 30 miles away.

I called the tenant several times over a two-week period before they finally responded and told me they were in the process of buying a house and moving out. This was a red flag but the property was 30 miles away and I was VERY busy. Yes, I could just give them 24 hours notice and drive down there, but they had been in the home for 11 years so what difference would it make?

By the way, I conducted more evictions in my first six months than I have in the last 52 months of ownership! This was just one of my inherited problems.

@Becky C. the owners acted like the could care less. I tried for several months to motivate them to let me take the tenants to court, but they refused. After a few more months they were clearly stressing and started blaming me for their problems. I fired them and haven't heard from them since. I met a guy two years ago that was renting it and it sounds like they haven't put a dime into it.

@Kevin Harrison my claim of "worst tenant ever" is hyperbole but it is the worst I have personally had. I've taken over properties that were worse and I've seen worse online. I estimate $15,000 - $20,000 in repairs and lost rent. That's pretty bad for any investor except a slum lord.

Start by looking at www.NARPM.org and search for Property Managers there. You should interview at least 2-3, review their agreement, lease, and forms, and ask about how they handle various problem situations. Don't rely just on fees (but check them thoroughly!) because the most expensive manager may be able to make you the most money!

I do have a solid system! I use Propertyware for my accounting software. 90 days prior to lease termination, it emails my team, the tenant, and the owner that the lease is preparing to end and what needs to happen in the next 90 days. For the owner, it lets them know we intend to rent for an additional year unless we hear otherwise. This prevents the owner from coming back two months after lease renewal and telling us he wants to sell or move his son into the house.

I give the tenant their options to renew for an additional year, convert to a month-to-month with a rate increase, or move out. No matter what their choice, it lets them know we intend to inspect 60 days prior to their current termination date. At 60 days prior to termination, they are sent a second email telling them to call the office and schedule the inspection. If we don't hear back from them within one week, we schedule the inspection at our convenience and do it with or without them.

If they are moving out, we give them their move-out instructions and include a cleaning guide. We also let them know about anything we found in our pre-inspection so they have an opportunity to repair or clean before the final inspection. 

If they are renewing, we conduct the inspection to verify they are maintaining the property, not adding unauthorized tenants or pets, etc. We also ask them about any unreported maintenance issues because I don't want a bunch of little things turning into big things or adding up to a big cost at turnover. If everything looks good in the rental and their account history is good, we renew them or extend them.

I've been using this system for about two years. About 50% of my tenants get a full refund of their deposit. About 30% forfeit less than $100 of their deposit. About 18% have more than $100 in charges but they still get some deposit back. In the past 12 months, I've had six tenants leave owing more than their deposit would cover, which comes to about 2% of all renters. The average unpaid balance is $150. I would say that's pretty good!

I manage 250 units and inspect once a year. I contact tenants 90 days prior to lease termination and ask if the intend to vacate or renew. If renewing, I want to inspect to ensure they are taking care of it before extendi g them for another year. If leaving, I want to know what to expect for cleaning and repairs.

The exception is when tenant is late in rent or has complaints or lease violations. Those are indicative of other problems and I'll set up an inspection.

This works well for me and the tenants appreciate me treating them like adults.

@Tereal Wilsonn it means I hold it in trust, just like I would a security deposit. As a Property Manager with hundreds of Rentals, I keep security deposits in a Trust account. As a private investor, you may be able to use a standard checking or savings account, but you are still holding it "in trust" for the Tenant.