All Forum Posts by: Account Closed

Your points about typecasting are well taken.

What do you recommend landlords do?

The story of the HAVES and HAVE NOT (or the HAVES MORE and HAVES LESS) is as old as the human race. The HAVES MORE can likely afford to live in the pricier A and B neighborhoods if they choose to do so, while the HAVES LESS are likely to have only the lower-budget C and D neighborhoods available to them as their option.

When I don't meet my obligations, there are consequences. Under these circumstances, I prefer it when the people I'm forced to deal with sugar-coat the hammer by working with me in a touchy-feely manner. But if they want to be hard-nosed about it and tell me in no uncertain terms to either pay up now or pay a lot more in higher fees (bad credit rating, public notices on my record, eviction, and so forth), I accept the fact they have the legal right to exercise their nuclear option.

As far as I know, everyone faces the same potentially harsh consequences when something goes wrong (for example, the tenant in the White House can be evicted for committing high crimes and misdemeanors). Even Scrooge McDuck landlords (sorry about the typecasting) don't own the real estate they think they own. They just rent it from the government. The proof -- don't pay the property taxes, which can be thought of as the civilization dues that fund vital public services such as police, fire, and schools.

Owning a home has its rewards, but it's also a full-time job.

If you're lucky (as I was), you can make good money if the area jumps in value. In my case, no one outside the tech community had heard of Silicon Valley when I moved there in 1979. Now everyone has and many people want to live there, which drives up the cost of real estate. But I could have never predicted this end result in 1982 when I bought my house (which I sold in 2015 for a handsome profit).

If I purchase a home in Pensacola, I will treat the deal as income property where I'm both the landlord and tenant. I've gotten the American Dream out of my system. Now it's a matter of numbers and personal preferences. Right now, for example, I enjoy watching the landlord's staff mow the lawn and fix the stuff that needs to be fixed (which I'm paying for through the rent). Perhaps I'll enjoy taking on these responsibilities again soon and buy a home.

I would be driven out if my neighbor was a dirty, loud, boisterous bong smoking party animal and repeated attempts with my landlord were unsuccessful with getting the problem fixed. I would have no knowledge about whether my neighbor was current or not with the renters insurance.

The primary purpose of renters insurance is to provide liability coverage when something goes wrong (my coverage includes personal property, personal liability, medical payments, loss of use, and hurricanes). Landlords require tenants have this insurance for a reason.

A secondary purpose might be to screen out the marginal tenants. I know from the county web site that the apartments were purchased at a bankruptcy sale many years ago and longtime residents tell me when the place started accepting HUD tenants, "that's when the drugs came in." They also said the first thing the new owners did was raise the rents, which according to these longtime residents, "got rid of the drugs" because the users couldn't afford to live here anymore. I heard the new owners then spent millions fixing up the place, which had deteriorated pretty badly over the years.

My takeaway conclusion is letting a property go through a downward spiral only encourages that downward spiral to continue. The bad actors drive out the good actors and the desperate landlord is stuck with more bad actors to fill the vacancies. One solution, as has been stated over and over again on many BiggerPockets threads, is to establish your tenant criteria and stick to them no matter what.

This whole thread is a corner case in that it uses hyperbole to make a point about something that almost never happens (posting an eviction notice on Christmas day). Eviction notices are posted all the time "around the holidays" because of coincidence: Bad actors don't stop acting badly around the holidays and need to be dealt with in an appropriately legal manner. The point of the thread is to get people to think about whether they would "go this far" if the situation ever came up in practice.

The odds of most landlords ever being sued are low, but should it happen, the stakes might become high. Jurors are supposed to base their decisions on the facts of the case and not their passions and prejudices, but they are only human. The more likely scenario for most landlords is probably a tenant advocacy group that decides to sue over an issue for the publicity more than for the potential remedy (the test case they hope convinces the Supreme Court to make a landmark decision). The landlord gets caught in the middle and has to spend time and money dealing with the situation. But this is also a corner case that doesn't happen very often.

Business is business, but I agree that how one goes about doing business is based on personal style and self-interest. For example, most juries are not composed of fellow landlords, but rather of renters and former renters, now homeowners, with bad memories of previous landlords in many cases. How one conducts business today might have an impact down the road on the outcome of your trial if one of your tenants, or a tenant advocacy group, sues you over something you allegedly did. Many movies and TV shows portray landlords and business executives as the villain because that's what audiences expect.

Gresham's Law probably also applies to rentals and to real estate in general: The bad tenants drive out the good ones.

My renters insurance lists my landlord as an interested party and gets a copy of my policy every year showing I've paid it. The previous owner of the apartment complex didn't require renters insurance, but I got a policy anyway because I wanted umbrella insurance. The current owner, which bought the place earlier this year, requires all tenants have such a policy as a condition of renting or renewing. I pay for the policy once a year (the cost is under $200 a year).

I don't know what my landlord would do if I failed to renew my renters insurance, but I would likely find out at the time my lease came up for renewal.

Life still happens on legal holidays (Christmas is a legal holiday because Congress says it is). For example, first responders are on the job whether it's a legal holiday or not. Landlords can't tell their creditors they will get paid as soon as they get paid by their tenants. The bills keep on coming whether your rentals are vacant or rented out and paid up in full.

Some people understand their responsibilities. For example, my current neighbors tell me they keep their TVs and stereos turned down because they don't want to disturb others. But I had one neighbor in the past tell me that since he wasn't trying to get me upset, it wasn't his problem if his loud music at midnight upset me (his lease was not renewed because he failed to "get it" after several warnings from the landlord).

You try to avoid serving an eviction notice on a legal holiday (or the week with a legal holiday), but if that is the only choice available, you do what you have to do (legally) to be able to keep paying your bills. Or as President Truman once said: If you can't stand the heat, get out of the kitchen.

Although I've never been a landlord and I would hate to deliver an eviction notice on Christmas day, I could if I ever had to (I would hire someone to do it for me to avoid the risk of confronting the tenant myself).

I worked for a company back in the 1980s that would stage its layoffs around the holidays. One year, the company had a major downsizing just before Thanksgiving, which happened to be on the day before the new Plant Closure Act of that era took effect. This action spared the company of a huge layoff expense they would have otherwise had to pay if they had waited a day to do the layoffs.

The company was one of the semiconductor firms in Silicon Valley that lived from hand to mouth because it's a tough business to be in. I was never laid off from this company myself, but I voted with my feet eventually and left on my own schedule (as did many of my colleagues). The experience of working there toughened me to the harsh realities of the business world.

I like to think of myself as compassionate and able to work with people to get problems resolved while they are still small problems, but sometimes you have to do what you have to do when something doesn't work out for some reason.

What are your views on proper risk management?

The reason I'm asking is because I thought risk management was a personal preference based on judgement call. The reason we have markets is because of differences of opinion (one person's risk is another person's opportunity).

In my case, I agree philosophically with the other posts on this thread: To have the resiliency you need to get through the inevitable rainy day, don't overpay for anything and don't let yourself go too deep into debt.  It also helps to have some financial reserves in the form of savings.

My risk management approach has changed over time. When I was younger and had nothing to lose, I was willing to take on more risk than I am today. Now that my nest is featured, I'm not willing to risk what I have and need for something I don't have and don't need. What I consider risky or not risky today is a judgement call based on my experience of what worked and didn't work for me in the past.