All Forum Posts by: Scott P.

My lease doesn't allow the tenant to repair unless the repair is less than $25 (think towel bar coming loose and just needs screw turned).  My lease requires tenant to pay for repairs under $25 - but in over 20 years I've never had to require a tenant to do that.

I wouldn't let the tenants hire the contractors because if the tenant didn't pay I suppose the contractor might put a lien on the property.  I'm the guy w/experience hiring repair folks and contractors.  So I have the final decision.

With that said, I would have a discussion w/the tenant and let them have input on the plumber and the cost if the tenant was paying for the damage.  I've always found that the money changes hands easier if the payer has control, or as much control as possible.  I'd also only hire a State licensed plumber.

And with that said, if the tenant has moved and this is coming out of the deposit then I'd hire any licensed plumber I wanted to hire at a reasonable price.  In my area, the letter after move out deducting the damages will hold up in my experience.  

Finally, I try hard to work with the same contractors over and over.  My life is easier when I can pick up the phone and make a call and they all know me and send me invoice for a fair price - or call to get my approval if they encounter something that in their experience is odd and pricey.  For me this is especially important for property that is out-of-town.  Those relationships take some time to develop but are worth it to me.

I also wonder why lose a good tenant over only this and why was the plumber's invoice so high?   If this happened in may area, I'd think my plumber took advantage of me as much as the tenant.  Admittedly though, maybe he had a good reason in your case for his invoice to be so high.  I admit i don't know all the details.  Also I acknowledge I've seen a jump in plumbing costs since 2017 in my area.

Knowing only what you're telling us I'd take it out of their deposit and I'm a guy who hardly ever takes anything out of a deposit.

In my leases, I'm only responsible for clogs between the unit and the street.

@Matthew Paul and @Joe Splitrock, my classic symptom of a toy, or an ink pen, or a similar object in the toilet is a slow flush or no flush (for a while) until the clogged toilet paper wrapped and bunched up around the object dissolves.  Then all is well while the toilet is used for "liquid waste" but once toilet paper is put in it again then that classic symptom reappears.  Don't ask me how I know but the best way to show the tenant what the problem is, is to remove the toilet, take it out into the yard, and proceed to bust it up with a sledge hammer while they observe (wearing safety glasses of course).  Then, you hand them back their ink pen to go with the crossword puzzle book by the toilet - and hand them their invoice.

Not long ago I picked up a tenant who had his natural gas (heat and hot water) shut off and whom I was almost evicting.  (His ex, my other tenant, had taken away their car.) I drove him to the gas company and City Hall (water and sewer) to collect the balance of his deposits - which i don't think he realized existed - minus whatever he owed them and minus the fee to turn the gas on as it went into my name.  

In spite of the unit looking like a disaster - they obviously didn't own a vacuum and didn't spend much on cleaning supplies - I refunded their deposit less the landfill fees to dispose of what they left behind.  We actually walked through the unit together and the tenant rode w/me in my truck and helped dispose of the junk.  Technically it was me helping him do what he should have done anyway.

Sure I could've squeezed a few more pennies out of the tenants but they had paid me around $30,000 over the preceding 4-5 years.  I enjoy all the aspects of investing, building, interacting with people, being efficient on the processes involved, and providing a decent place to live for others so that I can wake up after 15 or so years during which they paid for real estate for me to own.  I must not be in it solely for the money.

HI Ryan,  I agree with @James Ma and @Joe Villeneuveand @John Meyers 

Everyone find what works for them.  It sounds like you might be more like me, looking for a balance between building wealth while living in the here-and-now and giving to community and while making life enjoyable for my family and friends in the here-and-now.

I would ask myself:

1. Do I know anyone else who has worked with the contractor who I can ask how this subject was treated by them/him?  If so, I'd contact them and ask.

2. I'm wondering what he thinks his mechanism is to bill for "pipe, brackets, hold downs,..."?  Does he think he's going to give you receipts for reimbursement?

Lots of other questions run through my mind....I don't know for sure what I'd do but I might:

1. Say, "Time Out...Stop Work...Leave my property.  Send me the detailed list of the anything else you think you're going to bill for because I'm clearly telling you now that i'm not paying.  You'll get my confirmation letter in the mail."

2. On the other hand, if job is small and we're only talking an extra cost of $500 I'd probably pay him after he hands me his Final Waiver of Lien and never work with him again.

3.  Do something else.  

I keep 2 part carbonless paper with me at all times.  I use it when I make an agreement on the fly with a Contractor, a Tenant, etc.  Then we each sign it and we get a copy.  I tell them it's in case I "get hit by a bus" and they have to deal w/my wife (but it's also obviously in case they get amnesia and forget something we agreed to.)  That really wouldn't have helped you in the original scope of what was included but it might help you now if you'd like to document your conversations.

Thanks for posting this Samir.  I've been a reference for several tenants through the years and often thought about being able to report to credit bureaus as a way of helping tenants - and encouraging them to pay on time to earn that good report.  Perhaps there are many ways to do that but your the first I've heard of. (I've never really looked.)  For now, I'm just going to file your info and perhaps get back w/you in the future.

Thanks for sharing this.  Your lesson learned about the soil report/geotech report could help others save quite a bit of $.  Also congrats on a deal well done!

Hi Erich,  If I understand correctly, you would finish the renovations on the existing duplex and you could also subdivide so that a 2nd duplex could be build on the same lot - which would then have become 2 smaller lots?

The alternative plan would be to sell the existing duplex and the large lot maybe before finishing the reno?

If I understand this correctly then what I would do would come down to dollars.  If i was out of $ and full of headaches and hearaches perhaps I'd sell the reno uncomplete but I'd avoid that if possible.  If I could swing the money to finish the reno and pay the various fees to subdivide that is what I'd do.  As you know w/your background, zoning seems to only get tougher, not easier.  I'd do the subdivide while I can.  

I'd try then to sell the 2nd lot to recoup some $ if I needed the $ now unless I had enough $ to finish the reno without selling the 2nd lot in which case I'd sit on the 2nd lot for future use when I had more $.  If I had enough $ to finish the reno and build a 2nd duplex I'd do that too because the sooner I build it the sooner I could rent it and the sooner I'd start building equity.

With all that said, I'd err on the side of caution if it were me.  YMMV

Hi @Brent Thompson, I'm just now seeing your reply from 6d ago.  I think we're both relatively new on BP.  I've learned that if you start with an "@" symbol and then start typing the person's name a box will pop up to select the name. Then it appears in blue and I think the person get's a notification that his/her name was used and might look up the post.  I suppose this theory will be confirmed it you get a notification about this mention of your name! :-)

Here's the answer to your question about why I like Duplexes.  First, it's not that i don't like SFRs or Multi's or whatever but I've found in my area that Duplexes have advantages.  

1. I attract tenants who want as close as possible to a SFR, but for some reason don't want an SFR. They tend to stay longer than a more transient tenant in a larger multifamily.

2. The lawncare can more naturally be either a landlord or tenant responsibility.

3. Duplexes tend to be smaller than SFRs.  A Duplex w/2 bedrooms (BRs) on either side is ideally suited for 4 people or less and commonly has only 1 person. That single tenant uses the 2nd BR for storage. That means less wear and tear.

4. If a SFR has no tenant, I have no income. Only once in about 30 years did I have both sides of a Duplex empty. So, there's almost always income from one side or the other.

5. In my area, each side of a duplex added together brings more total rent than a SFR commonly brings.

6.  If you allow pets (which i usually do not), you'll have a wider selection of tenants.  With a Duplex, the tenant has a little bit of yard for the pet unlike a larger Multi.

Items 3, 4, and 5 are the the most important for me.

@Justin Kushner I like the LLC concept for property investments with family members because, among other things, it forces us all to write out our expectations and agreements. That could be helpful if a family member gets "amnesia" in the future. With that said, I wouldn't mind jointly owning a property in an informal partnership with one of my own immediate family members or even certain friends. The problems of course can come down the road if there are divorces, etc.

As far as financing, maybe try a "municipal bank" if those exist in that area. They tend to be small, personal, and have "Savings and Loan" or something similar in their name. I know in my area an LLC can hold a rental with a regular residential mortgage at a smaller bank like this. I just sold a rental last October to two partners who operated as an LLC. The closing was at the bank who provided them financing. I did a search on biggerpockets for the partners and their LLC thinking maybe they are like-minded as others are here but i'm not finding it.

Regardless, don't be surprised at all if, as a small investor, the bank wants everyone to personally guaranty the loan jointly and individually. In my case, I've had to personally guaranty all financing every time whether it was a SFR, multi, or commercial and whether it was real property or undeveloped land and regardless of the business type entity, Sole Proprietor, Partnership, or Sub-S, etc.