The Landlord Thread

[Bonny]

So the AZ house has been "turned". My tenant was the gentlest tenant we've had for any property. I had to paint three walls; that was it. All the other work was typically LL maintenance work.

Update on the condo. Advised tenant we would be selling and we have agreed on a mutual termination date of May 6th. This gets him out a little early and gives me some time to get the property on the market during the "hot" season. We'll bracket our sale with something like for sale May 15 - July 15th. If we don't have a contract by July 15th we'll lease out again.

Interestingly enough, even though the AZ house has been on the market for 2 weeks, we only had two showings before I arrived. I had a busy open house but none of the people were ready yet. My market there seems to be people selling their old house and building in a ritzy area NE of our house. However we've had MANY inquiries to sell. There isn't much for sale in our subdivision which is walkable to our little downtown. But I told DH, these folks are likely to low-ball us, figuring that we're tired of being LLs.

And there's a point that my agent made, which is that people who can afford that kind of rent are buying. And he's right; between the condo and the AZ house my last four tenants have all left to buy.

Guess we must be hitting the top of the market again!

[Bonny]

Jan 30, 2017 17:12:44 GMT -5 Bonny said:

So the AZ house has been "turned". My tenant was the gentlest tenant we've had for any property. I had to paint three walls; that was it. All the other work was typically LL maintenance work.

Interestingly enough, even though the AZ house has been on the market for 2 weeks, we only had two showings before I arrived. I had a busy open house but none of the people were ready yet. My market there seems to be people selling their old house and building in a ritzy area NE of our house. However we've had MANY inquiries to sell. There isn't much for sale in our subdivision which is walkable to our little downtown. But I told DH, these folks are likely to low-ball us, figuring that we're tired of being LLs.

And there's a point that my agent made, which is that people who can afford that kind of rent are buying. And he's right; between the condo and the AZ house my last four tenants have all left to buy.

Guess we must be hitting the top of the market again!

So wanted to give an update on the AZ house; found a tenant who will be living there from March 1 through December 31 with an option to extend for one month. They are building a house nearby.

He's a doctor and she's a nurse. Fingers crossed this is a no drama tenant!

[debthaven]

Great news Bonny! Sounds like that will work out well.

So the studio we want to sell is off the market until the reno is voted and done. We just lowered the price of the studio we were initially reluctant to sell (I don't want to say 'the studio we don't want to sell', because we do want to sell it now.)

Heard yesterday that there is a visit scheduled for Tuesday. Fingers crossed.

[debthaven]

Sooo ... the woman liked the apt but said it's too expensive. Our RE agent told her it was "somewhat" negotiable (but not by much, since we've already lowered the price). I asked the agent if she would also be willing to negotiate her commission, and she said yes.

I wanted the potential buyer's impressions, and I got them. All very good, except for the price.

We'll see what happens.

 

[Miss Tequila]

What does the realtor say about the price? Are you overpriced or does she just want a deal?

[debthaven]

Probably a bit high. But we had to pay 7% taxes when we bought it and we'd like to recuperate at least most of that.

[Bonny]

Good luck debthaven!

I know you can use the money and it would make your lives easier getting rid of one of your rentals.

[debthaven]

The agent called today. She said the woman wanted to make a really lowball offer, and they told her not to bother. The woman asked for more precise info on the ROI.

The agency knows that if we don't get a good offer, we'll hang onto it.

[debthaven]

So, I was hoping the woman would make a better offer, but she didn't.

I think I'm going to take that second studio off the market too ... partly to try to pique this woman's interest, but not only, because nobody else has expressed interest. I suggested that to the realtor two weeks ago, and she said she thought it was a bad idea. At this point I'm probably going to tell her to do it anyway. IMO it's never good to have a place hanging around on the listings for too long.

Works4me said a while back that we may just have to try to get through this cash crisis as we can, it seems she is right. We don't have much choice.

DH is still translating for extra income, and it looks like I will be able to pick up a significant amount of extra seasonal work in May and June, and increase my teaching hours as of Sept.

[raeoflyte]

I've been a really lazy, but incredibly lucky landlord.  One of my long term tenants is moving out and I was supposed to get into the place tonight to see what work I need to schedule and I completely spaced it out.  Tenant and I's schedule don't mesh and her mom doesn't speak english (which makes visits, really, really looooonnnngggg), so I'm not getting in until move out day on Sunday.  Really hoping my lucky streak hasn't run out, and I'm adding this property to our property manager to account for my laziness.  

[raeoflyte]

Saw the house today.  It could have been better, but it could have been a lot worse too.  I think the carpets will be fine to just have cleaned, and I only need to paint 2 rooms.  Looks like they tried to paint to match the existing, but didn't match it very well and the trim work is sloppy.  

We've always had drainage issues at that house and I of course tried the cheap fix last time.  I'm not sure when it happened, but the extended downspout was removed so water was pouring into the problem area and we had some water in the basement today.  Not a ton--my dad came over with the shop vac and he told me I should buy a mop (in the nicest way possible and then did shopvac up the water, but it wasn't nearly as much as I was worried about).  So we'll have to mudjack and I may have the structural engineer out again just to make sure he still feels like that is an okay plan of action.  I wish the tenant had said something about the downspout, but the drainage issues aren't their fault and this could be the first time its caused an issue since they were there.  

Carpet cleaning tomorrow and meet with the property manager to get his take on the place.  Hoping he has a handyman that can come up and do the small stuff that would take me a lot of time, and get it rented pretty quick.  

[Bonny]

Apr 30, 2017 23:00:18 GMT -5 raeoflyte said:

Saw the house today.  It could have been better, but it could have been a lot worse too.  I think the carpets will be fine to just have cleaned, and I only need to paint 2 rooms.  Looks like they tried to paint to match the existing, but didn't match it very well and the trim work is sloppy.  

We've always had drainage issues at that house and I of course tried the cheap fix last time.  I'm not sure when it happened, but the extended downspout was removed so water was pouring into the problem area and we had some water in the basement today.  Not a ton--my dad came over with the shop vac and he told me I should buy a mop (in the nicest way possible and then did shopvac up the water, but it wasn't nearly as much as I was worried about).  So we'll have to mudjack and I may have the structural engineer out again just to make sure he still feels like that is an okay plan of action.  I wish the tenant had said something about the downspout, but the drainage issues aren't their fault and this could be the first time its caused an issue since they were there.  

Carpet cleaning tomorrow and meet with the property manager to get his take on the place.  Hoping he has a handyman that can come up and do the small stuff that would take me a lot of time, and get it rented pretty quick.  

We used a geotechnical engineer to check out our house when we bought it 22 years ago. He determined that water pooling under the house and bubbling up into the garage was the reason there was a 4" difference from the kitchen corner to the far (diagonal) corner where the guest room is. Cheap fix was to do a French drain around the house. No problems since.

ETA You do need to maintain the drains. If they fill up the pooling will happen again.

[Bonny]

May 1, 2017 11:12:25 GMT -5 alwaysbeoptimizing said:

Getting bids to build our new personal house.  as part of it, underwriting wants us to sell one of our two rentals.  I HATE to sell out of this market, but I renewed one rental and told the other tenant that next May they need to move out because we'll be forced to list it.


probably good to reduce my exposure to Seattle area real estate, but I don't want to

How many rentals do you have now?

And Underwriting is allowing you time to sell your rental after they make a loan to you?

[debthaven]

The two RE agencies have been telling us for months that nothing is moving because of the upcoming French presidential election. Now that that's over, fingers crossed that one of the studios sells.

I'm also contacting another RE agency this week. It's not as local as the two we've been using, but it's in a bigger city not far from either studio. To her credit, it was one of the local agents that suggested that.

[raeoflyte]

I may have hit my limit and spent a bunch of time yesterday thinking about selling this place.  My tipping point was Sunday after replacing the carpet and the curtains and airing the place out all weekend there is still a pet odor in the place.  

I'm not sure how to make the decision objectively though.  Rental and passive income has always been a big part of my incredibly loosely defined retirement plan.  If I cash out I'm not sure how to know if that gives me a similar retirement plan.  According to my Phil Script, a lump sum investment of $100,000.00 bearing an annual return of 11% could grow to $2,289,229.66 in 30 years!  But that same amount at 8% over 25 years is only $684,847.52.  That's quite a difference.  Keeping the house seems like a safer bet, although I'm feeling really defeated about the whole thing right now. 

[bean29]

Tell me about it. We put a roof on our rental this weekend. We are at least $3500 in (DH paid cash to his brother $ friends) and we still have to go buy appliances for the lower & a washer dryer & shower door for upper. I am keeping mine at least a few more years-there is one loan for that building & DH's office. Sale proceeds have to payoff the loan balance for both buildings before I will sell the other b/c no bank will give me similar terms on a new loan.

[Bonny]

I met with my potential buyers yesterday for three hours.  We went over the property inspection with a fine toothed comb. I think they were pleasantly surprised that the property is in as good condition as it is. It IS in great shape given that it's been a rental for nearly 9 years. My last tenant left the place in good shape.

Now we're working out the finer details of the transaction. When I spoke to them I told them I noticed that their quote was for a second home and that their best rate is for a primary. They should get the rate for a primary since living here is their intention. Also they can put less than the 30% the lender is requiring for a second home. We also discussed their longer term plans and it sounds like will only be paying down a portion of their loan from the sale proceeds of their home. I advised them to check with their loan officer to see if the loan can be "recast" with a large principle pay-down to lower the payments.

Also, much to my surprise, they are open to me having an installment sale which will help my tax situation. We can accomplish this by me carrying back a note of $100k to be paid in one year so I get taxed on that $100k gain in 2018. 

[dee27]

May 8, 2017 10:10:31 GMT -5 raeoflyte said:

I may have hit my limit and spent a bunch of time yesterday thinking about selling this place.  My tipping point was Sunday after replacing the carpet and the curtains and airing the place out all weekend there is still a pet odor in the place.  

I'm not sure how to make the decision objectively though.  Rental and passive income has always been a big part of my incredibly loosely defined retirement plan.  If I cash out I'm not sure how to know if that gives me a similar retirement plan.  According to my Phil Script, a lump sum investment of $100,000.00 bearing an annual return of 11% could grow to $2,289,229.66 in 30 years!  But that same amount at 8% over 25 years is only $684,847.52.  That's quite a difference.  Keeping the house seems like a safer bet, although I'm feeling really defeated about the whole thing right now. 

If the pet odor is from urine, especially from cats, the smell will not fade without the proper treatment to the base floor underneath the carpet. Damp, rainy weather will heighten the lingering odor.

[bean29]

May 8, 2017 13:35:50 GMT -5 dee27 said:

May 8, 2017 10:10:31 GMT -5 raeoflyte said:

I may have hit my limit and spent a bunch of time yesterday thinking about selling this place.  My tipping point was Sunday after replacing the carpet and the curtains and airing the place out all weekend there is still a pet odor in the place.  

I'm not sure how to make the decision objectively though.  Rental and passive income has always been a big part of my incredibly loosely defined retirement plan.  If I cash out I'm not sure how to know if that gives me a similar retirement plan.  According to my Phil Script, a lump sum investment of $100,000.00 bearing an annual return of 11% could grow to $2,289,229.66 in 30 years!  But that same amount at 8% over 25 years is only $684,847.52.  That's quite a difference.  Keeping the house seems like a safer bet, although I'm feeling really defeated about the whole thing right now. 

If the pet odor is from urine, especially from cats, the smell will not fade without the proper treatment to the base floor underneath the carpet. Damp, rainy weather will heighten the lingering odor.

We had horrible pet odor in our last house when we bought it. DH sealed the floors with oil based KILZ Primer and that pretty much took care of it, but in really hot humid weather, I thought I could still smell urine.

[zibazinski]

My girlfriend's husband had to replace the slab due to pet urine. Kilz wasn't enough.

[CCL]

May 8, 2017 13:24:32 GMT -5 Bonny said:

I met with my potential buyers yesterday for three hours.  We went over the property inspection with a fine toothed comb. I think they were pleasantly surprised that the property is in as good condition as it is. It IS in great shape given that it's been a rental for nearly 9 years. My last tenant left the place in good shape.

Now we're working out the finer details of the transaction. When I spoke to them I told them I noticed that their quote was for a second home and that their best rate is for a primary. They should get the rate for a primary since living here is their intention. Also they can put less than the 30% the lender is requiring for a second home. We also discussed their longer term plans and it sounds like will only be paying down a portion of their loan from the sale proceeds of their home. I advised them to check with their loan officer to see if the loan can be "recast" with a large principle pay-down to lower the payments.

Also, much to my surprise, they are open to me having an installment sale which will help my tax situation. We can accomplish this by me carrying back a note of $100k to be paid in one year so I get taxed on that $100k gain in 2018. 

You are braver than me. I would never trust anyone to pay me $100k. It sounds like a good opportunity for you, though.

[Bonny]

May 8, 2017 21:44:53 GMT -5 CCL said:

May 8, 2017 13:24:32 GMT -5 Bonny said:

I met with my potential buyers yesterday for three hours.  We went over the property inspection with a fine toothed comb. I think they were pleasantly surprised that the property is in as good condition as it is. It IS in great shape given that it's been a rental for nearly 9 years. My last tenant left the place in good shape.

Now we're working out the finer details of the transaction. When I spoke to them I told them I noticed that their quote was for a second home and that their best rate is for a primary. They should get the rate for a primary since living here is their intention. Also they can put less than the 30% the lender is requiring for a second home. We also discussed their longer term plans and it sounds like will only be paying down a portion of their loan from the sale proceeds of their home. I advised them to check with their loan officer to see if the loan can be "recast" with a large principle pay-down to lower the payments.

Also, much to my surprise, they are open to me having an installment sale which will help my tax situation. We can accomplish this by me carrying back a note of $100k to be paid in one year so I get taxed on that $100k gain in 2018. 

You are braver than me. I would never trust anyone to pay me $100k. It sounds like a good opportunity for you, though.

Lol, I wouldn't do it for anyone else including my own family!

They talked to their loan officer yesterday and are still putting 30% down. With their income, pensions, annuities and general NW they are a good risk. And if the worst happened and I had to foreclose on them I could still cover payments with the rent. I haven't done the calculations yet but I suspect their mortgage payment on the new loan may actually be lower than what I'm currently paying for the existing mortgage. 

[raeoflyte]

May 8, 2017 13:35:50 GMT -5 dee27 said:

May 8, 2017 10:10:31 GMT -5 raeoflyte said:

I may have hit my limit and spent a bunch of time yesterday thinking about selling this place.  My tipping point was Sunday after replacing the carpet and the curtains and airing the place out all weekend there is still a pet odor in the place.  

I'm not sure how to make the decision objectively though.  Rental and passive income has always been a big part of my incredibly loosely defined retirement plan.  If I cash out I'm not sure how to know if that gives me a similar retirement plan.  According to my Phil Script, a lump sum investment of $100,000.00 bearing an annual return of 11% could grow to $2,289,229.66 in 30 years!  But that same amount at 8% over 25 years is only $684,847.52.  That's quite a difference.  Keeping the house seems like a safer bet, although I'm feeling really defeated about the whole thing right now. 

If the pet odor is from urine, especially from cats, the smell will not fade without the proper treatment to the base floor underneath the carpet. Damp, rainy weather will heighten the lingering odor.

My sister had 26 cats and 3 dogs at one point and we've cleaned up 2 of her houses.  1 of them was a unit in our triplex that we still own 12 years later and I know is 100%.  The other one was fixed up and sold, so I can't say if they ever had recurring issues, but I'm hoping not.  Dh and I lived in another unit of the triplex at the worst of my sisters issues.  Sometimes I feel like pet odor is an over arching theme of my life, and when I get really stressed out I still smell cat pee--which is awesome when you still own 2 cats and then you have to figure out if you're really smelling pee, or if its in your head.  

That said, I really didn't think this place was that bad but it kind of looks like I was wrong.  I really didn't expect the carpet to go in as fast as it did.  The property manager will hopefully go over today and tell me what he thinks.  I have a few more ideas that we can work on.  

Although I realized I have about 45 days to sell the place and not pay capital gains, so now I'm even more torn on what direction to go.  

*I owe it to my sister to add that she is really doing amazing.  If you've ever read the kids book, 'Cats, cats, cats' that is basically her life story.  She finds happy homes for dozens of cats per month and doesn't have to keep them all anymore.  

[raeoflyte]

So at the risk of sounding like a crazy person I went over last night and...it didn't smell.  I hired someone to do a move out clean because despite my hours of time into the place I barely did anything besides the kitchen (and there was still so much freaking grease in that kitchen!) and I wanted to see what kind of job she did.  It looked great and smelled good--like the housekeeper had been there--not like air fresheners.  I'm crossing my fingers that lasts.  

The property manager also got it rented out for the price I wanted for 6/1.  All feels right in the world again. 

Still one other unit to finish and rent.  Hopefully we'll get a break after this. 

[Bonny]

And it gets more interesting...

CPA actually wanted me to carry more ($200,000) and spread my $300k gain over three years $100k this year, $100k in 2018 and $100k in 2019. This reduces our tax bill by about $60k. Buyers are on board as they won't have to re-cast or refinance after they sell their house. I'll be charging 4% interest which is better than any 1 or 2 year CD I could get and that's about the rate the buyers would have paid if they borrowed from the bank.

Win-win for everyone!

[Bonny]

Thought I would give an update.

We signed the purchase agreement Friday. They went and bought furniture at an estate sale also on Friday. Got delivered today. We opened up escrow today and we all will be signing docs on Wednesday and they will bring their deposit check. Close of escrow is targeted for June 15th. Hopefully I head home starting Saturday.

Of course what I thought was a minor toilet clog has turned into a shower replacement project. Plumber found hot water in the other toilet and in the cold water taps for the tub and sink. About $550. Cha-ching!

[Bonny]

Another update:

So on Friday May 19th just as I was getting ready to head home we had a little bomb lobbed at us because the buyer's lender,

USAA, left a message on the buyer's VM killing the deal because despite the loan officer checking with her supervisor, USAA will not lend on a deal with a seller carry-back. This seemed unbelievably stupid since between a 30% down payment and us carrying back $200k USAA's first mortgage was at about a 40% loan to value. We couldn't get anyone to return our phone calls to explain what was going on so I called a mortgage broker I knew who is based in the SF Bay Area. Five years ago she helped us refinance our Southern CA house (the one we sold last summer). She checked and seller carry-backs are not prohibited by FNMA or Freddie Mac so it's obviously a USAA issue.

Buyer's gave their app over the phone Friday afternoon and we thought everything was hunky-dory but then two more issues popped up. First, FNMA/Freddie require seller carry backs to be for at least 5 years and interest must be paid monthly to keep the loan from having negative amortization. In other words, they don't want to see the loan balance grow due to unpaid interest. Amusingly enough, the underwriter told our loan officer to have us sign the new note and after escrow closes have the parties amend the note to our original intentions.  Technically I would think this is fraud but in this case, since the buyers have lots of liquid investments and can afford these large pay-downs no one is worried that the buyers would actually default. So we're re-drawing the note back-dating to match the Deed of Trust and I'm having the Escrow Officer send me the original note which we will use as an addendum and re-sign.

The other thing that popped up is that according to the new lender, the buyers were having trouble meeting their Debt to income (DTI) ratio. That struck me as odd because I knew she had a very strong income and they had no debt other than the $95k loan on their primary home. Their three rentals were paid off. Turns out that by virtue of them making large pre-payments to that existing mortgage (we're talking almost $4,000/mth) that the credit report was showing that being their monthly debt vs the amount they actually needed to pay which was probably around $900/mth. So since the new lender was going to lend with only 20% down vs the 30% down, the buyers are paying off the $95k loan thus solving the DTI problem.

I feel lucky to have such creative and willing buyers!

Appraiser came out Friday too. We may actually be able to close escrow as originally scheduled despite the substitution of lender!

[Bonny]

And on a separate note, I had to post about condo's HOA stupidity and how that's playing out...

So while I was staying at the property, I ran into the HOA PM and the Board President who were doing their monthly walk-through on May 11th. The buildings are getting a new paint job and one of the things they were checking out was areas that still needed to be addressed. They mentioned that there was some issue with my unit's balcony which had been enclosed years before by a prior owner. They said there was damage and that I was going to have to pay for it.  We went around to the back parking/garage area to look but as the area had already been painted and is effectively two stories up I couldn't see any obvious issue. I asked for a copy of the report so I could see what was the claimed damage. I didn't get the report and again wrote to the PM asking for a copy. I still didn't get a copy. On Tuesday, my buyers sent me pictures of the HOA's contractor working on my unit.

I immediately called the HOA PM and asked what was going on? How could the HOA do work on my unit without my authorization or a chance to review the proposed work? Well, it was pretty obvious that HOA F-Ued and didn't follow their own noticing process. The report is dated December 12, 2016.   The PM said she was going to talk to the Board President and I asked that he give me a call. He did and said he's going to recommend to the Board that they pay the bill.

But the story gets better. I sent an urgent e-mail to the PM yesterday basically demanding that I get a copy of the report because I must disclose this repair to my buyers. She sent it and low and behold the "outside contractor" who made the initial assessment is the brother of the folks who live below my unit. These are the people who have made two insurance claims against my insurance. The icing on the cake is that the husband is on the HOA's Board of Directors.

Talk about a conflict of interest!

Of course the brother makes a claim in his report that somehow the dry rot damage from my unit has contributed to a leak in a 40+ old enclosed patio.

So far, I haven't heard about any insurance claims and if they try I will fight them. You can't make a claim six months later after all the work has been completed and not give the other party a chance to investigate.

Unbelievable!

I was thinking that I might need to go to the June Board Meeting but I suspect they will address this matter in closed session. How embarrassing for the Board. The good thing is that if this "fix" by the HOA contractor doesn't work, the HOA owns it.

I've passed the repair info along to the buyers.  Now they'll have documentation in case there's a problem down the road.

You can't make this sh*t up!

[zibazinski]

May 27, 2017 10:54:26 GMT -5 Bonny said:

And on a separate note, I had to post about condo's HOA stupidity and how that's playing out...

So while I was staying at the property, I ran into the HOA PM and the Board President who were doing their monthly walk-through on May 11th. The buildings are getting a new paint job and one of the things they were checking out was areas that still needed to be addressed. They mentioned that there was some issue with my unit's balcony which had been enclosed years before by a prior owner. They said there was damage and that I was going to have to pay for it.  We went around to the back parking/garage area to look but as the area had already been painted and is effectively two stories up I couldn't see any obvious issue. I asked for a copy of the report so I could see what was the claimed damage. I didn't get the report and again wrote to the PM asking for a copy. I still didn't get a copy. On Tuesday, my buyers sent me pictures of the HOA's contractor working on my unit.

I immediately called the HOA PM and asked what was going on? How could the HOA do work on my unit without my authorization or a chance to review the proposed work? Well, it was pretty obvious that HOA F-Ued and didn't follow their own noticing process. The report is dated December 12, 2016.   The PM said she was going to talk to the Board President and I asked that he give me a call. He did and said he's going to recommend to the Board that they pay the bill.

But the story gets better. I sent an urgent e-mail to the PM yesterday basically demanding that I get a copy of the report because I must disclose this repair to my buyers. She sent it and low and behold the "outside contractor" who made the initial assessment is the brother of the folks who live below my unit. These are the people who have made two insurance claims against my insurance. The icing on the cake is that the husband is on the HOA's Board of Directors.

Talk about a conflict of interest!

Of course the brother makes a claim in his report that somehow the dry rot damage from my unit has contributed to a leak in a 40+ old enclosed patio.

So far, I haven't heard about any insurance claims and if they try I will fight them. You can't make a claim six months later after all the work has been completed and not give the other party a chance to investigate.

Unbelievable!

I was thinking that I might need to go to the June Board Meeting but I suspect they will address this matter in closed session. How embarrassing for the Board. The good thing is that if this "fix" by the HOA contractor doesn't work, the HOA owns it.

I've passed the repair info along to the buyers.  Now they'll have documentation in case there's a problem down the road.

You can't make this sh*t up!

Another reason to stay away from HOAS. Someone on the board is always in bed with someone.

[zibazinski]

This HOA has serious issues and I'm so grateful I'm moving and it's not my problem.