All Forum Posts by: Ed W.

I have and have had many, many rentals in low income areas.  I have NEVER collected rents.  Some of the rents have been as low as $350.  Many  of the tenants don't have good life skills or much in the way of education but if they want a roof over their heads they can - and do - figure it out.

I give prospective tenant a brief overview of expectations prior to them filling out an app and have a cordial heart to heart covering those expectations - both verbally and in written form - again with tenants prior to them signing the lease.  After that, it's on them to figure out how to get it to the office (or in a bank account or via the internet) on time.  I'll help them figure out the mechanism that will work best for them but the monthly on-time part is up to them.  No bills, no calls, no emails, no knocking on doors.   If I take over a property that already has tenants I have a cordial conversation and help them make the transition if the previous owner collected rents.  I may give them pre-addressed envelopes for the first 6 or 12 months or help them figure out how to do it online.

Your time is much better spent looking for good deals or spending your time with family and friends.

If they can't get their act together, we will part ways.  The only exception to that might be if the market really soured and vacancy rates were very high making it difficult to find good tenants.  In that case, I might have to come up with some Plan "B".  

@Jeff Sheraton Nothing is perfect, but I've found the following combination to be a reasonable balance for most properties:

1. SimpliSafe Security System

2. Glass block windows for basements

3. Lexan (not plexiglass which is too brittle) sheet over each reachable window and door Lexan is the same material used for bullet proof windows but for that use it has to be much thicker than what we need.  

It is clear and I've had no problem selling retail with it in place.  It's boarding up the property without it looking like it's boarded up.  

I started by using 1/4" but now use 3/16".  You can throw a brick at it and it will laugh at you - or ricochet the brick back to your head.  It's not cheap (price tends to rise and fall with oil prices) but you can re-use, resize, etc.  It comes in 4 x 8 sheets, can be cut, drilled, etc.   

I just casually point it out to buyers and renters and say that our insurance company requires it while a property is vacant and it will be removed prior to them moving in.  BTW, DO NOT leave it place once the property is occupied.  Tenants cannot get out windows in case of a fire if Lexan is in place.

Of course, if you are going to have a security storm door in the front and/or back anyway, most of those are probably sufficient for those doors.

4. Metal cage for AC units.

@Randy E. Whether they stay or go, I'd do at least the following:

1. If you haven't already photographed the house, do so.  Having a clear record that there is no visible mold or mildew will be helpful if this situation "hits the fan".  Be thorough and document nooks and crannies as well as all the common places you'd expect some mold.

2. Talk to a knowledgeable landlord-tenant attorney who can (a) tell you whether or not your state imposes obligations upon landlords both prior to leasing and after leasing and who can determine whether or not you are compliant with state and fed law and (b) offer you guidance about how to handle this situation properly.  

3. With assistance of counsel, if you and the tenant agree to terminate the lease, get an ironclad mutual release that protects you from lawsuits.   5 years from now when an in-grown toenail leads to a death (at least that will be their logic) because of complications related to the "mold factory" you leased to them they will come looking for you.  It may be they're just trying to get out of a neighborhood that makes them uncomfortable or it may be they're going for a pay day for of their "pain and suffering" and every future illness that comes their way.  Who knows?  Protect yourself.

@Jeff S. I think I must have had more than a few misfiring neurons when I wrote my reply.  Mea culpa, I agree with your deed-in-lieu assessment.  

@Gail Greenberg I'm a very strong believer in keeping people nice enough to help me with financing very safe (this is true whether in seller-financed deal or on the rare occassion I might use a private lender). I think you do a great disservice to your private lender if they don't have a mortgage AND sufficient equity (say 30% of FMV) above the combined loan-to-value of the first and second to protect their position.

I'm not an attorney but I strongly suspect that the hard money lender holding a deed has the potential to compromise to a degree the private lender and, if I were the private lender, I'd sure be getting competent legal advice relative to law and precedent in the state wherein the property is located.

I am not a member of the legal community but I'm a very experienced investor who sells a majority of properties "as is" and have given this issue a lot of thought and attention.

First, it is highly likely - almost to the point of certainty - that this issue can be strongly impacted by state law and legal precedents within the particular state(s) where you are doing business.  I strongly urge you to talk to knowledgeable real estate attorneys within the state(s) you want to do business.

When I researched the issue more than 20 years ago, I was given advice by a real estate attorney.  I don't know whether or not it was the correct advice or how universal it is (that is, it may be suitable only for the state of Ohio - or not at all for all I know) but I have followed it - thus far without repercussion.  Whether or not it is an "as is" deal, if you are aware of a latent (hidden) defect, disclose it.  My understanding is that there is no obligation to look for problems but if you come across a problem that is not obvious - according to him in my state, I should disclose it.  Beyond that, I say nothing but do let the buyers know they can and should inspect to their hearts content and take as much time and use whatever inspectors they want.  After they buy - with decisions based solely on their inspections - it's theirs, don't bother me.  BTW, when I buy "as is", I use the same standard for me.  I'm  a big boy, if I screw up I look in the mirror and blame the guy I see, not the seller.  The only exception would be fraud or a some form of deliberate cover-up.

I couple that with stealing from the best. I've bought many REO's and most banks have great documents and procedures for limiting liability on "as is" deals. I use documents and procedures that are similar.

At the end of the day, you can still be sued no matter what you do but the idea is to cover as many bases as you can so that you are in a good position to deal with a suit should one emerge.  I don't think anything can give us full protection but good procedures can substantially limit our liability.  

@Luis Rojas, I don't like to disagree but the advice by @Jim Pellerin to open the negotiation "...for what you owe..." is fraught with peril particularly for someone like yourself who is brand new.

I know it sounds "cool" to start the negotiation that way but the fact is that what they owe could be higher than what the property is worth.  Offers should be made from knowledge and strength, not by guesswork and prayer.

Check your area for real estate investment organizations to find educational resources, search BP and google for information about how to determine the value of property, and don't make offers until you know what a property is worth as it currently sits and after repairs. Your goal is to make a profit and that means you have to buy it for less than it is worth "as is".  Once you know that, you can determine whether or not you can afford to pay what they owe.

Thanks, all, you confirmed my sentiments on the issue.

If someone agrees to meet "close to 9 AM" what is considered a reasonable deviation from 9 AM to be consider "on time".  For example, "John, I'm not sure what the traffic will be like but I should be there close to 9 o'clock."  If you are John, what's the latest you would expect the person to meet you given the general nature of "close to"?  

I've done numerous multi-parcel deals (deals with 2, 4, 5, 10, 12, and 36 come quickly to mind) and I'm in contract for another 2 at this time.   I have always used one contract BUT that is not without it's problems.  

Among other considerations, if you want absolutely want or need all of the parcels, one contract is probably the best option (or multiple contracts with language that requires all to close or allows none to close) because a deal killer defect in one will allow you to bail on all.  If you prefer to close on as many as possible but don't necessarily need all, then one contract for each with no language linking the contracts would be smarter because you can bail on any that have serious problems you don't want to deal with.

There is a lot of experience and knowledge on this site, I expect you'll get other food for thought as well.