All Forum Posts by: Todd Blyton

The OA is what you would be your internal agreement between the parties involved so its not totally necessary for a lawyer to set it up as its not a public document.  A place that I have gotten templates from ishttps://legalees.com/ anthor place that I have looked at getting templates from but have yet to get them from is:  https://information-services-unlimited.myshopify.com/collections/all.  I am sure that one of the Attorney’s here will be able to give you some better info on the OA they can set up but this can help you get started.

I use a PM.  I dont really like to but I am gifted between little and no time in the day to spare.  But issues that I have seen with PM are.  

Not knowing the property, it is just an address in they’re  system.  

Not knowing you.. your just a bill to them when they finally do send you the rents,  they do not do much to build a relationship with you for your mutual growth.

Not knowing your Tenant.  They should be the face of not only there company but yours as well, and they often fail at that.  They do not take the time to know what a tenants needs really are let alone how to handle a tenant that might be overly needy or unreasonably demanding.

Accounting — I have to audit the statements on a regular basis.  One PM is over billing me that I have to resolve and one is charging a prepaid fee to the tenant for furnace filters.  I not seen the expense for the filters on the owners statment yet, so I need to investigate why there is not an offsetting cost to the revenue or if the revenue is being collected and nothing is being done. The water billing from last quarter to this quarter shows a increase in usage so my question to the PM did someone move in?? Or is there an issue with a leak that needs to be addressed.

Communication —  I am the owner and paying for there services,  they should be contacting me on a regular basis to report on the property.  I should not have to reach out to them for information or to provide guidance to them regarding accounting,  Tentant, or maintenance issues.

I have had one great tenant, when there is and issue he contacts me before the management company.  I either talk him through the issue or I will at times contact a contractor that I like to use.  

There was one tenant that was sourced with the PM and she was a nightmare from the date she moved in.  The PM contacted me almost monthly to resolve an issue with this tenant and I knew when a holiday was getting close because she always had to have an issue.  They took care of very little in this case, had expremenly poor communication with me and did not take charge with an out of hand Tenant.  There actions or lack there of created some issues that lasted years with this tenant.

Another time a tenant quit paying rent and apparently moved out.  PM did nothing but send emails to the tenant for payment.  They did not go the the property to give pay rent or quit notice or a welfare check to check on the status of the tenant.  It took two months to get resolved and the tenant left the property so dirty I had to replay all the flooring..Including a nice bamboo floor, paint everything because the non smoking property was so gritted up from pot smokers, and strip and refinish the kitchen cabinets because there was so much grease on them it was like a rendering plant that had never been cleaned before.

Maintenance — contractors can be contractors and the PM really do nothing to hold them accountable

Follow up — they do not follow up on anything unless it creates revenue for them.  Ie original leasing fees.  

One last point they are slow to pay.  I have audited statements from the PM they show rents received from the tenant say the 23rd of the month, and I do not get credited the funds to me until at least the 5th of the following month.

Oh, and as far at the Tenant negotiation goes.  It’s your company, your property, and your policies.

I would agree with others that the language on your lease needs a refresh.  The best bet would be to find a lease that is state specific and reviewed by the bar association in your state.  That does not mean that you cant addjust it to your company’s needs and unique attributes of the property.

The parties are usually designated in the first part of the lease, ie... Leasor(Landlord) or Leasee(Tenant), so whatever convention is spelled out in the first part of the lease should be consistent through the lease.

Section x. Holdover.

Should the Leasee intend to vacate the premises, a written notice to the Leasor at least 45 days prior to the intended departure is required.  Should this lease lapse without a successor agreement and the Leasee holdover, this lease shall remain in force for for one(1) month and shall renew monthly until such time that either party gives 45 days notice to vacate the premises, or a successor agreement supersedes this agreement.

The above might be close to the language you are looking for.  I use 45 days, basically a two week notice with a months rent to get the place tenable for the next resident.  I would not go much longer than 60 days because if the tenant really wants out they will hopefully just leave, and leave the property in condition that will not require a whole lot of cleaning and repairs.

I try to keep my leases from July to July,  I had tried a 1 1/2 lease to move the time from January start to July start.  Worst headache of a tenant ever I paid to help her move out the following march.  A year is good to keep turnover costs in check,  month to month from the start and your turnover costs could be rather high, and any longer that a year contract and you could be locking in a contractual migraine.

I rekey at every tenant turn over.  I use schelage locks and have extra cores so when the tenant moves out I grab a set of cores and change them out.  You can find rekeying kits on amazon and videos how to rekey the cylinders on the YouTube.  With the kit you can set up a master key system as well.

My thoughts were consolidated costs and record keeping while potentially allowing for segregated liablility protection due to frivolous  lawsuites when multiple properties are held.  My personal goal is to have an entity set up for instate holdings as at some point my wife and I would like to reside in her home country,  I feel it would be easier to manage our holdings in an entity when we are outside of the country.

Thank you Scott,

This will give me information that will be great for when I start doing more investing outside of Wisconsin.  

Thank you Ryan.

This will give me a good place to start, I was asking Wisconsin specifically because the properties are instate and at this time I didn't want to have to set up an LLC out of state and then register as a foreign entities. If i was to look at this route, I would set up an out of state LLC as a holding company and then owning instate LLC. My thought of having the instate Series LLC was so that I would only need to have one instate LLC, with the serise underneath each holding an individual property in the state. Thus only needing one checking account and one registered agent.

I am debating on setting up an LLC for holding my Wisconsin property. I am Looking at getting my second property sometime in the near future. I have read that Wisconsin has a watered down version of the Series LLC law. Has anyone here set up a Serise LLC in Wisconsin? If so how has it worked out for you?

@Tim Chiu Although I do not like to spend any funds I do not need to. I am not a lawyer, and can only provide a potential scenario . In this case you will probably have to eat the last months rent and pay the tenant. First, what will it cost you to go after the seller to recover this funds. You might be able to ask the closing agent why it was not discovered by them, but then again what would it cost to recove the funds from them if they were liable. You could tell the tenant tough luck, but what if they had nothing to loose and found some ambulance chasing attorney to sue you. In discovery they would most likely find the information even on a side note from documents you or the closing company could be compelled to supply. You could then be found liable with more costs than just paying the rent back. One thing you may be able to do is to pay it back and reduce the amounts of rent received making it a tax write off, but ask your tax accountant.