The Landlord Thread

[Bonny]

lurkyloo,

The 35% of one month's rent is about 1/2 what you would pay for a 6% rental fee on a 1 year lease. This is where you would need to put your foot down and say minimum 1 year lease. Also ask what happens if the tenant defaults during the lease period. Will they waive their fee to re-lease?

BTW find out if they are going to put the rental listing into the MLS. I'm finding that for the higher end properties folks (especially older folks) prefer to work with a real estate agent vs Craig's List.

Good luck with the home purchase.

[lurkyloo]

Just had the other people (PM A) back out for a visit.  They're really fixated on paint and carpet where PM B was worried about smoke and carbon monoxide detectors.

I'm torn.  I can see what they're saying and I'm sure higher end renters want a more polished place.  But this place is really nice without being pretentious and it could turn into an incredible amount of work to make it pretentious (we are not the only amateurs to paint the interior!).  I don't necessarily want top dollar exactly (it's hard to define top dollar anyway since there are very few places on the market and none that really compare) and I really think there's no point in replacing good quality carpet when in all probability tenants will have kids and pets.

On the flip side if it's a difference of $700 and if both companies screen tenants equally carefully I think I'd rather put the money into the house anyway.  

[resolution]

When I turned my old house into a rental, my PM was also pretty picky. She wanted to repaint the kitchen with a semi gloss paint, and all the baseboards in the house. She also wanted a ceiling fan in every room and some minor touch ups to the walls. We did the ceiling fans ourselves and then had the PM's contractors come in and do the painting and deep cleaning on the house. I think I spent around $900 on the house to make it ready to rent.

I figured that part of what I was paying for was experience in knowing what potential tenants were looking for in a house.

[lurkyloo]

We don't even have tenants yet, and I already hate them for being so high-maintenance.  

 Someone who rents our house wanting a perfect model home is going to be disappointed.  Someone who rents our house because they want an awesome spacious house and garage on a very private half-acre with easy access to everything is going to be in heaven.  I can and likely will fix the details they were harping on in the living room, but I don't have time or inclination to do the same throughout the house--it's a 1980s model with a history of DIY owners, at least one of whom saw no need to use painter's tape when painting white walls next to oak cabinetry    And there's a buttload of cabinets.

We just dropped 10K on having the exterior painted and the back lawn replaced; I repainted the laundry room and all the white baseboards and we will replace all the screens before we go.  But there's pretty literally an endless list of things we could do to improve the house and it still wouldn't be perfect.  It also bothered me that they just didn't seem to be much interested in listening to me.  They kept going back and forth between saying how there was no 4Br inventory at all and the next breath it was how this was going to fall so far short of expectations.  All because of the LR.  If they'd done more than a perfunctory tour of the rest of the house maybe they could have bitched about some of the other rooms too. 

...Yeah okay, I just didn't like them much.

[Wisconsin Beth]

And those 2 are the only options?  Can you find PM C? 

[Bonny]

I do a lot of painting between tenants. It's hard to move furniture in and out of a place without dinging some of the walls.

Is the carpet stained? I have a really good carpet cleaner who uses a dry extraction method. I'm always amazed at how good an older carpet looks when he's done. I have 10 year old carpet (which wasn't expensive to start with) which has survived families and pets and still looks surprisingly good. That said the expensive white wool carpet that was in my mother's condo was ruined by one set of jerk tenants.

Are you going to allow pets? I've found that many of those tenants do not want a "perfect" house. They are grateful to have someone who will rent to a family with a pet.

[lurkyloo]

These were the two companies that jumped out at me for having no negative reviews online.  I can deal with the other company, I think--they seemed more concerned about real maintenance issues rather than cosmetics.  And they are willing to strike the one clause; we can see whether they'll negotiate the placement fee.

The issues with paint in the LR are more sloppy margins than dings; I've fixed the dings and have a paint can that matches the interior paint ready to go!  I also hated the suggestion to put blinds up-there's a valance over the large window with the view of the backyard, which is a focal point of the room and to my mind is a selling point.  If tenants move in and hate it they are welcome to put up curtains.  I keep flashing back to DH's story about his parents' realtor making them buy expensive window treatments; they drove by shortly after the house sold and saw all the expensive window treatments in the trash.  

We had the carpet in the LR cleaned at Christmas and it looked fine.  I don't think there's anything in the carpet that won't come out except maybe in the study; I'd be okay with replacing that carpet.  And we won't take cats but will take dogs and kids, which are the cause of 99% of the dirt already. This company wouldn't believe me that the stains would come out.  

I'm pretty sure it'll rent as is and that the projected difference in rent wouldn't make up for what we'd spend fixing all the minor issues.

[Tiny]

LurkyLoo Said:

Oh, and I'm still interested if anyone wants to share any tips on picking a property manager? I have this nagging suspicion that a PM might actually take better care of it than we have... all our spare time ran away when DS arrived.

I've got a PM for my out of state condo. The condo is in an area with LOTS of rentals so PMs seemed to be a dime a dozen. I opted for a PM that was associated with a Realtor and had dozens of properties they manage.

The PM does charge 10% for their service.

The PM provided the Lease (it outlines way more stuff than the NOLO lease/rent forms available - and included stuff I never would have thought to include - even with the NOLO info. I originally started out thinking I'd be a long distance landlord so ordered the NOLO forms/documentation on landlording. Well worth the cost even though I didn't use the forms. I DID order the forms/documentation for the state my second property is in and DID use those forms). The PM screens the tenants. They do check work history and credit reports.

I like that the PM sends me an automated monthly statement and a check (I need to have this switched to direct deposit) I get a yearly tax form (can't remember the form #) AND a summary statement showing the monthly rent, the PM charge, and any repair bills they've paid. If they are called out for service the charge comes out of the rent... So far, in two years I only had pay out of pocket for the initial recondition/repairs of the unit. The PM has replaced a broken microwave, a broken window, and repaired a leaking toilet and a leaking outdoor hose faucet thingy. It's all good.

There is a HOA for the condo - I pay those fees (and the mortgage/insurance/taxes). When the HOA sends me a NastyGram (the fence needs staining or the tennent has left their Christmas Decorations up too long) I just forward it over to the PM - and they deal with it.

In my case the PM is priceless - but then I've got some serious positive cash flow - even with the PM's fees and the various repairs. So the cost isn't burdensome. I barely think about that rental property.

[TheHaitian]

Would you buy a condo to rent out?

There is one for sale on my block. It is a 6 unit complex with $150/HOA fee.

It is rather small 3 bedrooms / 1 bath and 800 sqft. The asking price is 80k, they purchased it for 100k in 2010

The last unit that sold in that complex sold for 36k in 2012 and was purchased for 107k in 2010. The drop in value is somewhat concerning ...

I figure if it drops more I can maybe try to snatch it for 40-50k. What do you say?

[TheHaitian]

Also if it makes a difference, it was a family home that was turned into a 6 units condo in early 200's.

Just looked at the town info and past sale, the owner/flipped off each unit at ~100k /each.

Each unit is owned by someone that doesn't live there; so everyone there are now renters.

Also the unit for sale is a Homepath one so not sure if that make a difference.

[justme]

I think the homepath program means it had to sell to oo or at least they get first pick. At least the one by me was essentially like bank owned in that it's as is and you cover all closing.

A three bedroom at 800 feet sounds incredibly small (my one bedroom is 739!) Is there much of a market for the tenant you would want?

[TheHaitian]

Mar 25, 2015 11:50:23 GMT -5 justme said:

I think the homepath program means it had to sell to oo or at least they get first pick. At least the one by me was essentially like bank owned in that it's as is and you cover all closing.

A three bedroom at 800 feet sounds incredibly small (my one bedroom is 739!) Is there much of a market for the tenant you would want?

I checked on the Homepath website and it seems for the first 21 days the unit can only be viewed and sold to Home owner occupied buyers.

The two places I am interested in are both past the 21 day period.

The second place is a 3 bedroom / 1 bath / 1,152 sqft and 1 car garage and the asking price is $190,000. House doesn't seem to need any repair but not sure if we can swing that mortgage without a tenant,

The condo seems to have a market for it since the other 5 units are currently rented ... Off course I am not expecting high income earners making 6 figures. For the target market, I believe it will be rented.

[Bonny]

Mar 25, 2015 10:40:40 GMT -5 TheHaitian said:

Would you buy a condo to rent out?

There is one for sale on my block. It is a 6 unit complex with $150/HOA fee.

It is rather small 3 bedrooms / 1 bath and 800 sqft. The asking price is 80k, they purchased it for 100k in 2010

The last unit that sold in that complex sold for 36k in 2012 and was purchased for 107k in 2010. The drop in value is somewhat concerning ...

I figure if it drops more I can maybe try to snatch it for 40-50k. What do you say?

Aren't you already having cash flow problems?

[TheHaitian]

Mar 25, 2015 20:23:27 GMT -5 Bonny said:

Mar 25, 2015 10:40:40 GMT -5 TheHaitian said:

Would you buy a condo to rent out?

There is one for sale on my block. It is a 6 unit complex with $150/HOA fee.

It is rather small 3 bedrooms / 1 bath and 800 sqft. The asking price is 80k, they purchased it for 100k in 2010

The last unit that sold in that complex sold for 36k in 2012 and was purchased for 107k in 2010. The drop in value is somewhat concerning ...

I figure if it drops more I can maybe try to snatch it for 40-50k. What do you say?

Aren't you already having cash flow problems?

Where did you get that idea 

[Bonny]

Mar 25, 2015 22:00:57 GMT -5 TheHaitian said:

Mar 25, 2015 20:23:27 GMT -5 Bonny said:

Aren't you already having cash flow problems?

Where did you get that idea 

ymam.proboards.com/thread/44244/help-me-find-money

[TheHaitian]

Mar 25, 2015 23:24:20 GMT -5 Bonny said:

Mar 25, 2015 22:00:57 GMT -5 TheHaitian said:

Where did you get that idea 

ymam.proboards.com/thread/44244/help-me-find-money

I did post in that thread that we
- were not going into the negative every month as everyone assumed
- still saving every month and 25% towards retirement
- just wanted to see if we could save extra by acting like we have a kid right now since in the past 3 months I spend down our savings account by 6k.

Actually 8.9k if you count the hospital bill I paid yesterday.

But to answer your question, no not having cash flow issues.

[Deleted]

Mar 25, 2015 11:10:51 GMT -5 TheHaitian said:

Also if it makes a difference, it was a family home that was turned into a 6 units condo in early 2000's.

Just looked at the town info and past sale, the owner/flipped off each unit at ~100k /each.

Each unit is owned by someone that doesn't live there; so everyone there are now renters.

Also the unit for sale is a Homepath one so not sure if that make a difference.

Is the association self-managed or run by an outside company? I would check on that before anything else. My condo was in a converted 4 unit home and we were self-managed. Due to one asshole unit owner, it turned into a giant clusterfuck. Self-management is not all it's cracked up to be.

[justme]

So even after paying out all that money you have the 20 prevent to put down? I think puerile always say you need at least that with non oo.

[Bonny]

So it's time for one of my entertaining LL updates.

The newer (as of Nov) tenant of my N. San Diego County house and the gardener are at each other's throats.  Tenant had been turning off the irrigation system so the lawns can't get watered. I've run into this situation before so the lease explicitly states that the tenant will allow the gardener access to water the garden. Tenant is mad because her water bill is so high. Well duh, it's a big house with three lawns.

Gardener got pissed off. Apparently she's been telling him to stop hand watering the areas which the sprinklers don't reach. Keep in mind that she was verbally advised AND it was written in her walk-through that City delivered water is on the low side and the gardener needs to hand water. I don't know exactly what he said, she said he was rude. He said he got pissed off because she keeps complaining about her water bill but keep adding more and more container plants which require hand watering.

Anyway I've advised him to just walk away rather than say something that isn't nice. He's worked for me for 10 years and for the prior owner for 20. The other tenants have all really liked him. The tenant has a point in that the City is now in stage 2 drought restrictions. After my "love" note yesterday, tenant sends a pissy e-mail stating she won't be doing anything extra to the garden. We're buying a new irrigation timer and I've sent a copy of the stage 2 drought restrictions to the gardener whom I'm sure already knows about the situation since he lives in the same city and has other customers in the city.

I LOVE playing referee.

[HoneyBBQ]

Apr 7, 2015 13:05:15 GMT -5 alwaysbeoptimizing said:

OK, my update. On my subdivision, I met with our municipality and the WOULD require me to improve the public street, likely to the tune of 100-150K to make it easier for fire trucks.  wow, wow, wow that is tough.  I might have to switch my plan and do our home addition first, then come up with the money to improve the street/etc to subdivide.  woooooo the environmental crowd sure runs the roost

[The Captain]

Apr 7, 2015 13:05:15 GMT -5 alwaysbeoptimizing said:

OK, my update. On my subdivision, I met with our municipality and the WOULD require me to improve the public street, likely to the tune of 100-150K to make it easier for fire trucks.  wow, wow, wow that is tough.  I might have to switch my plan and do our home addition first, then come up with the money to improve the street/etc to subdivide.  woooooo the environmental crowd sure runs the roost

Wow - that sucks - so sorry to hear that!

[The Captain]

And now for my update...

We have two multi-family properties - 5 units total.

Property #1 is a three unit - one of the units is having trouble paying on time.  AND we just redid the kitchen and bath in there and are planning on putting carpeting in soon.  Oh yea, and a new water heater last month.  DH had put them on notice the next time the rent is even a day late we are giving them the 30 days notice.

We've replaced all the windows in unit #2, pretty much re-did the bathroom, and put in new carpeting in this unit.  Hope to keep stable tenants for awhile.

unit #3, really no problems.  Way below market rent since this guy does the lawn.  That will be slowly fixed over the next few years.

Property #2 - Tennants are pretty decent.  Just signed the landscape maintenance contract.  May need to have some exterior (ugg) sewer work done this summer.

We'll see how things go.

[The Captain]

Ok, just gotta throw this in really quick.

The city where we have our properties has a pretty robust set of rules in order to get a rental license.  Yes, I did my homework and knew what we were getting ourselves into.  There is actually a plus because the city inspects rentals regularly and it keeps the slum landlords out of the area.

In the meantime the city is trying to turn multi-family rentals back into single family or rental stock (reversal of city policy from the 60's and 70's).  The city is looking for any solid reason they can to strip a rental license.

Soooo...if a rental property is not rented for a period of 12 consecutive months the rental license is automatically revoked.  The city will not issue another multi-family license and the best you can hope for (and good luck with that!) is to get a single family license which will only be issued if the property is physically converted back to a single family.

Moral of the story - don't go for a multi family property that has been unoccupied for more than 7 months. 


So I still watch the real estate listings and recently saw two multi-family properties DH and I once considered that are now listed as single family short sales.  Sucks but it seems like the buyers didn't get tenants in on time or didn't do their homework.

Which goes back to - do your research peeps!

[Bonny]

Apr 7, 2015 13:05:15 GMT -5 alwaysbeoptimizing said:

OK, my update. On my subdivision, I met with our municipality and the WOULD require me to improve the public street, likely to the tune of 100-150K to make it easier for fire trucks.  wow, wow, wow that is tough.  I might have to switch my plan and do our home addition first, then come up with the money to improve the street/etc to subdivide.  woooooo the environmental crowd sure runs the roost

It's actually public safety that's the problem.

Apparently they don't make fire trucks that have a reverse gear anymore. God help you if you have more than one unit because they have to have a fire truck turn around.

[Bonny]

Apr 7, 2015 13:02:21 GMT -5 alwaysbeoptimizing said:

Apr 1, 2015 21:22:35 GMT -5 Bonny said:

So it's time for one of my entertaining LL updates.

The newer (as of Nov) tenant of my N. San Diego County house and the gardener are at each other's throats.  Tenant had been turning off the irrigation system so the lawns can't get watered. I've run into this situation before so the lease explicitly states that the tenant will allow the gardener access to water the garden. Tenant is mad because her water bill is so high. Well duh, it's a big house with three lawns.

Gardener got pissed off. Apparently she's been telling him to stop hand watering the areas which the sprinklers don't reach. Keep in mind that she was verbally advised AND it was written in her walk-through that City delivered water is on the low side and the gardener needs to hand water. I don't know exactly what he said, she said he was rude. He said he got pissed off because she keeps complaining about her water bill but keep adding more and more container plants which require hand watering.

Anyway I've advised him to just walk away rather than say something that isn't nice. He's worked for me for 10 years and for the prior owner for 20. The other tenants have all really liked him. The tenant has a point in that the City is now in stage 2 drought restrictions. After my "love" note yesterday, tenant sends a pissy e-mail stating she won't be doing anything extra to the garden. We're buying a new irrigation timer and I've sent a copy of the stage 2 drought restrictions to the gardener whom I'm sure already knows about the situation since he lives in the same city and has other customers in the city.

I LOVE playing referee.

Sorry to hear that.  i'm going to restate that I think you should at least one of your properties.  Since you're keeping the AZ one for another year, maybe that one is a prime target?  Or, sell you SD condo while the market is hot.  As you know, downturns always hit condos harder than SFHs.

Well I prefer not to anything.  But I would consider an unsolicited offer.

Next year we will see if the AZ tenants want to buy or keep renting. That will be Jan 1. Oceanside house lease terminates 6/30/16 and that's another possibility. Don't think it's a great time to sell the condo. I'm watching to see how the one across the building of mine does. He's got it listed for $699k. He's redecorated his but I think it still looks a little dark as it's in the NE corner of the complex. I figure mine's worth about $650k.

Besides you forget the condo is my "old lady" house.

[Bonny]

Apr 7, 2015 14:37:33 GMT -5 alwaysbeoptimizing said:

In fairness, the road requirement WAS from fire, so fair point. but the reason it's so expensive is related to environmental (stormwater, SEPA review, etc). otherwise, sure, it would be expensive, but not nearly so astronomical.

I will still likely do it, but it throws sand in the gears and will make me potentially have to sell one of our properties to finance adding to our house first, to allow us to then get in shape to do this subdivision

One thought is to see if you can use something like "turf block" or some other permeable or semi-permeable surface so your stormwater calcs are better. Alternatively turning that massive pavement area into some kind of outdoor patio space so it's not wasted space in your design.

[debthaven]

We will have a renter for our empty studio as of Thurs.

We had a hard time getting visits so we lowered the rent by 25e (about $27) and suddenly, by lowering the price by 25e, the agency's phone was ringing off the hook. A young woman saw it, loved it and wanted it, and told the agency she would sign as soon as she got back from vacation, in 2 weeks. We told the agency, NO WAY are we holding it for her for two weeks. Other people were very interested too. The agency told her that, she gave a friend proxy, her friend is signing for her on Thursday. 

This will be 9 months without rent from both studios, due to buying one (which took 6 months to close despite no loan) and redoing the other (2.5 months between the tenant leaving, our painter going on vacation, and re-renting it). So, 4.5K down the drain.

We will be VERY happy to have a new tenant (which the PM is dealing with, it's no secret that I am feeling overwhelmed.) I am greatly looking forward to establishing a new normal, with both studios rented.

[Bonny]

Apr 7, 2015 17:05:15 GMT -5 alwaysbeoptimizing said:

Apr 7, 2015 15:14:04 GMT -5 Bonny said:

One thought is to see if you can use something like "turf block" or some other permeable or semi-permeable surface so your stormwater calcs are better. Alternatively turning that massive pavement area into some kind of outdoor patio space so it's not wasted space in your design.

sorry, you don't understand.  I have to pave (concrete) the city street that is on the city land.  this isn't on my property.  I then have to deal with the stormwater landing on city property.

All of that is in addition to what i'll do on my own property when I actuall develop.  I also did check about permeable concrete and it's not allowed for city streets.  for private property, it's still counted as 100% impermeable in my municipality.

uggh.

what I really need is someone to loan me a million bucks for 2 years.

Got it. I thought it was on your land. I guess the bright side is at least you don't have to donate property for a street!

[Bonny]

Apr 7, 2015 16:53:33 GMT -5 debthaven said:

We will have a renter for our empty studio as of Thurs.

We had a hard time getting visits so we lowered the rent by 25e (about $27) and suddenly, by lowering the price by 25e, the agency's phone was ringing off the hook. A young woman saw it, loved it and wanted it, and told the agency she would sign as soon as she got back from vacation, in 2 weeks. We told the agency, NO WAY are we holding it for her for two weeks. Other people were very interested too. The agency told her that, she gave a friend proxy, her friend is signing for her on Thursday. 

This will be 9 months without rent from both studios, due to buying one (which took 6 months to close despite no loan) and redoing the other (2.5 months between the tenant leaving, our painter going on vacation, and re-renting it). So, 4.5K down the drain.

We will be VERY happy to have a new tenant (which the PM is dealing with, it's no secret that I am feeling overwhelmed.) I am greatly looking forward to establishing a new normal, with both studios rented.

I don't understand Debt, you didn't have to pay a mortgage on the 6 month sale process right? So the upside would be that you didn't have any expenses associated with the unit for those six months either?

And yeah, this is why I advertise while "under construction". If I've missed my rent mark (and I have) I'll know because I'm not getting the phone calls to show. At least I can quickly minimize my loss.

And sometimes it's just bad timing. Each my units has an "optimum" time. For the San Diego units it's summer so I end my leases June 30th. For the AZ house it's Feb 1.

Fingers crossed you've got a great tenant and it's smooth sailing from here on out. Oh, and you have that phenomenal vacation coming up. That's something to look forward to!

[debthaven]

You're right, Bonny, no expenses on that unit for the time it took to close.

But, we only break even on all our RE (ie one mortgage and two viagers) with two places rented. So although there was no mortgage payment on the "new" studio, between the two viagers and the existing mortgage, we were OOP for all those months. 

In short, the income from the two "regular" rentals (both studios) pays the mortgage for one studio (the other was purchased cash) AND the two 1BR viagers, plus some left over for property taxes, insurance, etc. 

ETA: I have to say, the young woman we have been dealing with has restored my faith in RE agencies / Property Managers, after 10 years of dealing with that crazy family-run agency and the Wonky Rental. She's smart, pleasant and very reactive. We're very happy with her.
    The agency was very open to just finding a tenant and having us manage it, but for 7%, I prefer to have them manage it too. I earn their monthly management fee in literally one hour at my job, so I'd much rather invest my time/energy there. I understand that many of you prefer to manage your property yourselves, and that the fees add up, but this is what works best for me.