All Forum Posts by: Patricia Steiner

Geez...that's not an area I would recommend under any circumstances.  Let the buyer beware.

I recommend you bolt. There are property management laws that apply to showing/presenting/warranting a property and you cannot rent a property with known deficiencies that do not meet the definition of habitability.  You would be an agent of the owner and that does not proclude you from liability - including from the Fair Housing Act as well as Landlord/Tenant Laws.  The fact that you know there are known deficiencies that will not be cured makes you liable.  You can't hide behind the fact that you're not signing the lease.  In Texas, the Attorney General cites 7 days as being the reasonable cure period.

Don't participate if you're not willing to assume the risk.  And, before you do anything in real estate, know your state's landlord/tenant laws.  What you don't know can hurt you badly. 

There are several issues here and none bode well for you as the landlord. Here's the Landlord/Tenant Laws in your state that pertain to your post:

"Property Maintenance – Tenants must keep the property clean and undamaged, and landlords have 30 days from when they are notified of any problems to fix them. Reasons a Tenant may withhold rent include:  Unsafe stairs, handrails, doors, and porches. Unable to lock the rental apartment securely. Leaking roof. Insect and rodent infestation."  There's more:

"According to Pennsylvania law – the City Rent Withholding Act – a tenant may be able to withhold rent if their apartment is “certified to be unfit for human habitation.” Hence, if there is a serious damage to the building which makes the unit uninhabitable, a tenant is within their right to withhold rent."  According to Pennsylvania law – the City Rent Withholding Act – a tenant may be able to legally withhold rent if their apartment is “certified to be unfit for human habitation.”  And, this: "Under the right to a safe and habitable home, a landlord cannot force a tenant to move into a home or unit “as-is” and cannot demand that the tenant be responsible for repairs."  A property with water running into the basement and rodents is uninhabitable due to potentially resulting health concerns.  

Bottom line: once you lease a property, you have NO choice but to provide a safe and habitable property with all deficiencies cured within 30 days.  No choice.  

I recommend that you not send a Demand Letter for rent ('the Notice to Quit for Unpaid Rent') as under the law, you're not entitled to do so.  Considering the condition of the property, I would offer 'cash for keys' and have them vacate sooner versus later before they learn that they can sue you for mold (water in basement), health issues involving the rodents and more. One call to code enforcement could lead to restriction on lease use.  

What you don't know will hurt you.  Do an online search of your state's landlord/tenant laws - and know them. Be careful how you press the tenants as you may end up with more than unpaid rent.  

When you acquire tenants through the sale, their lease with the previous owner remains in place - and cannot be altered.  You're stuck with the quality (or lack thereof) of that lease.  And, the only landlord/tenant issues that my clients have ever encountered has been with 'acquired tenants' (I personally will only acquire under vacant possession).  You want to buy the property - not the problems - so if you're considering taking the tenants, have your contract stipulate that you will be given the lease contracts and rent rolls within 3 days of executed contract and retain the right to cancel with return of escrow should the tenants not be acceptable to you. Review those documents and do a quick - yet thorough - online search of the tenants to confirm their employment, court records, more.  It's not uncommon for sellers to claim that the tenants are great to avoid having to deal with them.  Make sure 'good tenant' means quality - not 'good riddance."  Best...

It's time NOW to bolt from your PM - what they did is nothing less than malpractice.  And, knowing what you know, you need to make sure that quarterly inspections of the property are conducted without fail. If there is any violation of the lease, you will want to act immediately.  The best thing you can do at this point is to dump the PM and keep a tight leash on the tenants.  

UGH!  I hate this for you...

You'll be fine without one...they can be rented if needed.  A wet/dry vac is all most of us need for most 'adventures' we encounter.  Instead of planning for a disaster cleanup, prepare to mitigate that risk.  There are products like Quick Dam Flood Barrier - available at the big boxes and Amazon - to secure most of what you will encounter during our rainy/hurricane season.  Have a good tarp on hand should the roof leak or to prevent rain intrusion.  Make sure the lot grades away from the house and keep the gutters clear. And, when a storm is forecasted, act. Prepare your properties.  We had a close call with a hurricane last month and none of my clients' or my properties sustained any damage (frantically knocking on wood right now). The key is to be ready beforehand.  Hope this helps.

You'll need strong resource partners to guide/advise you through the process.  And, those include: an investment focused realtor (versus a general/residential one), a lender who does/love investor financing, an insurance guru, and a handyman.  Each should be an expert in their own field and let's face it - they're not a resource worth having if you know more than they do.  

And, look for an opportunity - not a property. The market is saturated but some of my best acquisitions came during the worst market conditions.  

Welcome to the forums. We're glad you're here.

Noooooo way.  "In most cases, homeowners insurance will cover a new roof if it's damaged due to an accident or a weather event. Wear and tear isn't covered, though, so it's important that you keep up with regular roof maintenance to avoid costly damage in the future."  (End).  And,  notice the statement reads 'in most cases.'  

Since it's not an insurable event, you could negotiate with the seller to (options):

1. Replace the roof prior to closing - and advise that it's replacement is required for the engagement of insurance.

2.  Be paid a seller's concession of some amount of closing as partial/full cost of roof replacement.

3.  Reduce the asking price by the cost of a new roof.

Buying a property requiring a new roof (or electrical, plumbing, foundation, ac) only makes sense if you can still engage insurance (most insurers will give you 30-days following closing to replace if there is a roofing contract in place) and if the cost is either covered by the seller or, if not, it can be replaced and still keep the cost of the property at or below current market value.

Hope this helps. Again, insurance isn't an option for you.

A couple of questions:

What would be the financial impact if you self-managed the property?

What are the rents for comparable properties in your market (look it up yourself...)?

What is the year-over-year property appreciation?  What is the year-over-year rent appreciation?

My recommendation would be to investigate what is driving the negative cash flow and how it could be cured - with and without a rent adjustment. Also, do your own online search into what similar properties are renting for in that same market.  The problem with selling a negative cash flowing property is that you will most likely be lowballed when you sell it.  I know that I only want to buy an opportunity - not someone else's problem - so cure what you can before choosing to sell.  Just one opinion...hope it helps.

This is a trigger for me; the incompetency is overwhelming. Housingwire ran an article on the epidemic of stupidity (my words, not theirs) for both realtors and loan originators - and how the incompetency has negatively impacted markets.  I simply cannot escape these people. So, rather than to go off the deep end here, I would like to share the following with my fellow BP investors:

If you have made a lot of offers and not had one accepted, it could be due to your realtor. 

If you requested a showing and couldn't get in, it could be due to your realtor.

If the seller/seller's realtor is hostile from the start, it could be due to your realtor.

The realtor reflects the competency and judgement of the buyer.  If your realtor is an idiot, it pretty much is a warning to the rest of us that you will be clueless as well.  Want to get more deals?  Hire a realtor who knows more about real estate markets/valuation/zoning than you do and who specializes in that type of real estate.  

And, just saying: if your realtor was selling sunglasses out of the back of his trunk last month before getting his real estate license, what comes your way is all on you.  I don't do stupid...I hope you won't either.