Need advice on my new tenant

[SP33Demon]

and better option really depends on what type of life you are looking for.

Certainly, some places are much, much better than others (even within DC region, some places are as bad or worse as any place in the US), so real estate is a far more risky venture even where it is considered hot.

The potential upside is greater or, well....maybe it isn't? I think Buffet is up something like 42% after 6 years with his boring Index fund in that bet against the hedge fund managers? Comparing the two and subtracting all the hassles involved with rental property makes that the clear winner in my book.

Lots of potential ups for sure, but so much luck, risk, and factors well beyond your control--a hot neighborhood may not be hot for long, and there's nothing you can do about that. Tying a very large illiquid pile of money into something influenced by several factors that you can not ostensibly control....well, there's the risk. And assuming neighborhood dynamics over several years is not an issue, you still need to rely on a stable of proper tenants over that time. it only takes one bad one to put you in the poor house.

At least with index funds, the "poor tenants" get pushed aside and their little share of your big shares gets replaced, predictably, by better tenants.

Well, on the flipside 1/7 of Trump Corporation's profits come from rentals ($71 in profit a year). They didn't get to over twice the profit margin of Apple by investing in markets that are that high of risk. Also, you are comparing the top Index fund with barriers to entry, not a typical one. I could also quote the top rental markets in the country which I'm sure are making more than 42% when you combine tax breaks + property value increases + rental income.

I also think you're overstating the risk in markets with limited supply like the dc area. Studies show that by 2023 our area will have a shortage of 226,000. Condos near a metro station will be gold in less than 10 years.
http://www.bizjournals.com/washington/blog/2015/07/think-its-bad-now-greater-washington-housing.html

 

[z1ggy]

As far as effort and risk, I feel like half the battle is having a good tenant. Some years youy might make a decent amount Bc nothing ever goes wrong, and another year your boiler goes belly up right after the septic tank fails.

I probably spent 5 hours texting this lady back and forth so far and I think that she's an outlier. Most people wouldn't waltz into somebody else's property and demand new paint, new blinds and oh can I pull up the carpet?

Over all, I view this more toward the medium side of risk, and probably low effort. Yes, index fund wound be much more simple, but it would take me probably a decade to build up an ira or other personal portfolio to get remotely close to this assets current value, let alone in 10 or twenty years from now.

If I had a trusted property manager, I would love to own a few duplexes if they were fairly new, and located near more educated and affluent areas.

Sent from my SAMSUNG-SM-G920A using Tapatalk

 

[zinfamous]

Well, on the flipside 1/7 of Trump Corporation's profits come from rentals ($71 in profit a year). They didn't get to over twice the profit margin of Apple by investing in markets that are that high of risk. Also, you are comparing the top Index fund with barriers to entry, not a typical one. I could also quote the top rental markets in the country which I'm sure are making more than 42% when you combine tax breaks + property value increases + rental income.

I also think you're overstating the risk in markets with limited supply like the dc area. Studies show that by 2023 our area will have a shortage of 226,000. Condos near a metro station will be gold in less than 10 years.
http://www.bizjournals.com/washington/blog/2015/07/think-its-bad-now-greater-washington-housing.html

I don't think it's ever possible to overstate risk in a market where value is completely determined by factors beyond one's control, especially when you are talking about a big pile of money that is difficult to move if shit hits the fan, but I'm just pointing out the obvious. None of this is to say that one is a better decision than the other, it's just that you are understating risks and limiting perspective on value. For you, value is purely determined by income, and that's fine for you. It isn't the whole story however.

....ignoring your unending silliness thinking Drumpf is more successful than Apple, I do wonder what you think the "large barriers of entry" are for someone that also wants to invest in VFIAX, like Buffet did for this bet

https://personal.vanguard.com/us/funds/snapshot?FundId=0540&FundIntExt=INT

$10k? that's a huge barrier? compared to....buying a rental property and getting to work on it to turn an income after, how many months on that giant pile of cash that is doing nothing for x amount of time while VFIAX could be doing very well?

so, buying the property for, let's say $290k is kinda normal, while $10k minimum barrier to entry leaves my example out of consideration? (go ahead and ignore the fact that one can start with VFINX at only $3k, then bump up to admiral when they hit $10k).

You really are a wonder when playing with silly numbers to bend them away from significance and towards your arguments. 😉

I do agree with you, though, that condos are a better option compared to houses if you are only in it for rent income.

 

[xgsound]

YMMV
A tenant in place is important to keep thieves and squatters out, not to mention covering taxes, utilities, insurance and mortgages.
I once had a tenant that first arrived before move in with 2 buckets full of cleaning supplies including rubber gloves to the elbow and started cleaning on the entry screen door and went through the house in detail. I found that encouraging.
They did ask for several things to be fixed/ changed that seemed above and beyond for me at the time, but were not major. They were always picky about the property.
The good news is they stayed for 5 years with minimal further effort and were equally picky about paying early.
You'll have to draw a line, but her interest in the property isn't necessarily all bad.
***Please note *** There is no such thing as a trusted property manager and more educated people just ruin better places. ***

Best of luck,
Jim

 

[Miramonti]

As far as effort and risk, I feel like half the battle is having a good tenant. Some years youy might make a decent amount Bc nothing ever goes wrong, and another year your boiler goes belly up right after the septic tank fails.

I probably spent 5 hours texting this lady back and forth so far and I think that she's an outlier. Most people wouldn't waltz into somebody else's property and demand new paint, new blinds and oh can I pull up the carpet?

Over all, I view this more toward the medium side of risk, and probably low effort. Yes, index fund wound be much more simple, but it would take me probably a decade to build up an ira or other personal portfolio to get remotely close to this assets current value, let alone in 10 or twenty years from now.

If I had a trusted property manager, I would love to own a few duplexes if they were fairly new, and located near more educated and affluent areas.

Sent from my SAMSUNG-SM-G920A using Tapatalk

The worst is a year with a crappy tenant AND the boiler goes out. :\

 

[SP33Demon]

I don't think it's ever possible to overstate risk in a market where value is completely determined by factors beyond one's control, especially when you are talking about a big pile of money that is difficult to move if shit hits the fan, but I'm just pointing out the obvious. None of this is to say that one is a better decision than the other, it's just that you are understating risks and limiting perspective on value. For you, value is purely determined by income, and that's fine for you. It isn't the whole story however.

....ignoring your unending silliness thinking Drumpf is more successful than Apple, I do wonder what you think the "large barriers of entry" are for someone that also wants to invest in VFIAX, like Buffet did for this bet

https://personal.vanguard.com/us/funds/snapshot?FundId=0540&FundIntExt=INT

$10k? that's a huge barrier? compared to....buying a rental property and getting to work on it to turn an income after, how many months on that giant pile of cash that is doing nothing for x amount of time while VFIAX could be doing very well?

so, buying the property for, let's say $290k is kinda normal, while $10k minimum barrier to entry leaves my example out of consideration? (go ahead and ignore the fact that one can start with VFINX at only $3k, then bump up to admiral when they hit $10k).

You really are a wonder when playing with silly numbers to bend them away from significance and towards your arguments. 😉

I do agree with you, though, that condos are a better option compared to houses if you are only in it for rent income.

Wrong again, it's quite easy to buy a condo in our area for under 150k if you time the market right. We bought ours for under 150 and we are earning income (1500) that a 5% fund would need a 360K cash investment to make, or even 10% a 180K cash investment. Furthermore, if you don't have the cash to buy outright then you can get a mortgage and have the tenant pay it for you - you aren't getting a payment plan on an index fund. The only barriers to entry for a rental are having the 20% down and good credit. Even the down payment has wiggle room - for example we did a zero down loan for our house and my buddy is only paying 2.5% on an FHA loan. Dropping the same amount as the down payment on a mutual fund @$20K is nowhere near the income level of someone paying you $1500 a month right off the bat. Do the math, which is the smarter investment if risk is taken out of the equation? You're getting 18K a year in rent off the bat vs 2K if the 20K has a (generous) 10% annual yield. You would need a $180,000@10% to equal the income from a rental that you bought for less than $150,000. Plus your asset will most likely go up, plus the tax benefits as I said before.

So now you simply have to minimize risk using things like site location analysis (any mapping software + public data can do this), research what the county/town plans to build and where, as well as demographic future trends and other variables that would make people want to move there (like great schools). Talk to some people in the area about what they like/dislike about the area. I gave DC metro as a prime example where the region will be short 226,000 housing units by 2023. If true, that makes it a solid investment for at least the next 7 years. Bonus points if you're near a metro (or bus stop to a lesser degree) or in a great (not good, but great) school district. Just do your homework. You continue to harp on luck and variables out of your control when that is really a small percent of the equation. Luck is always involved but luck favors the prepared.

 

[SearchMaster]

Sure, but carpets every 5 years (if you have carpets), repainting nearly every time you change tenants, cleaning, maintenance, new heating and A/C units every 10-20 years, and all the time spent in making all this happen. Plus the occasional "oops I accidentally left the water running" kind of tenant.

I'm a believer in real estate as an investment strategy but you keep acting like it's a zero-effort endeavor. Just as there are stories of landlords who get a tenant who pays on time every month for 5 years and leaves the place in better shape than when they got there, there are also stories of landlords who think they had a great tenant but ended up not paying, playing the system to stay in your property for months on end, and trashed the place before they left.

 

[SP33Demon]

Sure, but carpets every 5 years (if you have carpets), repainting nearly every time you change tenants, cleaning, maintenance, new heating and A/C units every 10-20 years, and all the time spent in making all this happen. Plus the occasional "oops I accidentally left the water running" kind of tenant.

I'm a believer in real estate as an investment strategy but you keep acting like it's a zero-effort endeavor. Just as there are stories of landlords who get a tenant who pays on time every month for 5 years and leaves the place in better shape than when they got there, there are also stories of landlords who think they had a great tenant but ended up not paying, playing the system to stay in your property for months on end, and trashed the place before they left.

Yeah I agree in general. My point is that all of that isn't going to make up the 10K a year in income vs an index fund. You work harder but earn more so your extra time into it will usually pay off. If you get tired of it, you can always sell and usually for a profit. Not to mention taking home equity loans if you need a cash advance for whatever reason.

Having a bad tenant would suck, but that's what screening is for. Credit checks, references, length of employment and where they work (military/gov are the best) are all essential. Parents with young kids are usually a safe bet. They are more mature since they have a responsibility. We had it narrowed down to a young couple no kids or a single mom. We picked the single mom and she hasn't missed a payment yet. I know shit happens, but that's what insurance is for if they decide to destroy the place.

 

[zinfamous]

Wrong again, it's quite easy to buy a condo in our area for under 150k if you time the market right. We bought ours for under 150 and we are earning income (1500) that a 5% fund would need a 360K cash investment to make, or even 10% a 180K cash investment. Furthermore, if you don't have the cash to buy outright then you can get a mortgage and have the tenant pay it for you - you aren't getting a payment plan on an index fund. The only barriers to entry for a rental are having the 20% down and good credit. Even the down payment has wiggle room - for example we did a zero down loan for our house and my buddy is only paying 2.5% on an FHA loan. Dropping the same amount as the down payment on a mutual fund @$20K is nowhere near the income level of someone paying you $1500 a month right off the bat. Do the math, which is the smarter investment if risk is taken out of the equation? You're getting 18K a year in rent off the bat vs 2K if the 20K has a (generous) 10% annual yield. You would need a $180,000@10% to equal the income from a rental that you bought for less than $150,000. Plus your asset will most likely go up, plus the tax benefits as I said before.

So now you simply have to minimize risk using things like site location analysis (any mapping software + public data can do this), research what the county/town plans to build and where, as well as demographic future trends and other variables that would make people want to move there (like great schools). Talk to some people in the area about what they like/dislike about the area. I gave DC metro as a prime example where the region will be short 226,000 housing units by 2023. If true, that makes it a solid investment for at least the next 7 years. Bonus points if you're near a metro (or bus stop to a lesser degree) or in a great (not good, but great) school district. Just do your homework. You continue to harp on luck and variables out of your control when that is really a small percent of the equation. Luck is always involved but luck favors the prepared.

No one has ever questioned the specific math here. I bolded the part that you conveniently like to ignore again and again with these comparisons

Risk is actually very important--which here is dependent on the whims of fleshy biological humans, which are the unpredictable canard in this equation. Some years, you will look great, others...well luck is luck.

This isn't something that I'm not considering, just not very appealing to me at this moment. There are certainly plenty of things you can do to tailor around luck with the proper location and pricing towards a better pool of tenants, but you can never escape the fact that neighborhoods are a rather fluid dynamic.

 

[NetWareHead]

I try to rent to tenants without small children. They tend to put greater wear and tear on units. If the kids are tornados when I meet them, its usually a red flag. Best tenants I ever had were a responsible late 20s engaged couple who moved out after 3 years to buy a house. Another great tenant is a late 40s divorced business executive who travels frequently and has partial custody of a 13 year old daughter.

 

[Ns1]

No one has ever questioned the specific math here. I bolded the part that you conveniently like to ignore again and again with these comparisons

Risk is actually very important--which here is dependent on the whims of fleshy biological humans, which are the unpredictable canard in this equation. Some years, you will look great, others...well luck is luck.

This isn't something that I'm not considering, just not very appealing to me at this moment. There are certainly plenty of things you can do to tailor around luck with the proper location and pricing towards a better pool of tenants, but you can never escape the fact that neighborhoods are a rather fluid dynamic.

yeah, he just needs a tenant that refuses to pay $3500 in rent and ties him up in the courts for months, or a tenant that puts concretes in the pipes when they get evicted. a few of those will sour you on real estate right quick.

 

[z1ggy]

Update: tenant requested I find a contract to "remove old leaves along driveway and trim these overgrown trees" and that she's split it with me 50 50.

Item 21 on lease states she except property as is. I was nice and got 3 of the rooms repainted, and have her 45 bucks to clean the bathroom and some random stuff out side.

You think I have the right here to tell her in not paying for it? Clause 3 states she is responsible for lawn care, but that I am responsible for.. "all other expenses such as damage, etc" which meant if a tree fell in a storm and needed to be removed from the property, I'd pay for it.

It's vague enough where she might argue that the tree trim counts under that clause.

 

[Ns1]

No way

 

[RossMAN]

Hold everything!

Pics of tenant?

LOL just when you least expect it, I should have known better :thumbsup:

 

[NetWareHead]

Update: tenant requested I find a contract to "remove old leaves along driveway and trim these overgrown trees" and that she's split it with me 50 50.

Item 21 on lease states she except property as is. I was nice and got 3 of the rooms repainted, and have her 45 bucks to clean the bathroom and some random stuff out side.

You think I have the right here to tell her in not paying for it? Clause 3 states she is responsible for lawn care, but that I am responsible for.. "all other expenses such as damage, etc" which meant if a tree fell in a storm and needed to be removed from the property, I'd pay for it.

It's vague enough where she might argue that the tree trim counts under that clause.

Do you really want her to be trimming trees? Operating a chainsaw and standing on a ladder? Hope you have good insurance. I consider that kind of stuff within the landlord's purview anyway as trees need trimming infrequently and given the dangerous nature of the work and often professional involvement.

Just respond that the leaves fall under her responsibility given the contract she signed.

 

[clamum]

LOL. She's bitching to you about some leaves along the driveway instead of taking some responsibility and initiative and just fucking doing it herself. Good Lord... good luck with that tenant. She sounds like she'll be f'ing great to deal with.

 

[z1ggy]

Do you really want her to be trimming trees? Operating a chainsaw and standing on a ladder? Hope you have good insurance. I consider that kind of stuff within the landlord's purview anyway as trees need trimming infrequently and given the dangerous nature of the work and often professional involvement.

Just respond that the leaves fall under her responsibility given the contract she signed.

Pine trees, no chain saw needed just clippers. I'm honestly considering going up to do it myself or seeing if my neighbor would do it for like 40 bucks.

I'll ask for a pic. If ladder is needed id hire somebody. But first is to see of its really needed.

 

[Schfifty Five]

Update: tenant requested I find a contract to "remove old leaves along driveway and trim these overgrown trees" and that she's split it with me 50 50.

Item 21 on lease states she except property as is. I was nice and got 3 of the rooms repainted, and have her 45 bucks to clean the bathroom and some random stuff out side.

You think I have the right here to tell her in not paying for it? Clause 3 states she is responsible for lawn care, but that I am responsible for.. "all other expenses such as damage, etc" which meant if a tree fell in a storm and needed to be removed from the property, I'd pay for it.

It's vague enough where she might argue that the tree trim counts under that clause.

Good lord. Between this thread and your other new job thread, you sound like a big push over.

Anyway, on one hand, you shouldn't let her walk all over you.

On the other hand, it is smart as a home owner to have your trees trimmed annually. If she's offering to split it 50/50 with you, consider that a plus for you.

 

[z1ggy]

Bc I never really have the upper hand. Hard to be in control when you don't have much leverage.

More Than likely I'll just do it myself

 

[Schfifty Five]

Bc I never really have the upper hand. Hard to be in control when you don't have much leverage.

More Than likely I'll just do it myself

Control? You own the house. Your contract spells out everything.

You do have control.

But going back to the tree thing, in this case, I do think you should take up her offer and split 50/50. Again, as a home owner, I think it's in your best interest to keep your trees properly trimmed which will help avoid any incidents from overcrowding of the branches and possibly breaking off in a storm or something.

Just for reference, I had two trees in my front yard trimmed recently and it cost $175 total. It took 4 guys about 1-1.5 hours to finish the job. They cleaned up and hauled away all the branches too. Worth it in my opinion.

 

[z1ggy]

It is my house but at the contract said for who pays for what, I wrote "all other costs" that aren't associated with lawn care. It was meant to be if a tree got damaged in a storm etc, so the contract was vague enough in this case for it to be questionable. Lesson learnt I guess.

I'll have to see what the picture looks like that she sent me. I lived there for 6 years and never had to trim those trees. It's like they stopped growing kind of. I think they are privacy trees of some kind, but maybe I just never noticed.

I'm sure I'll update next week or so with more things she wants.

 

[Schfifty Five]

It is my house but at the contract said for who pays for what, I wrote "all other costs" that aren't associated with lawn care. It was meant to be if a tree got damaged in a storm etc, so the contract was vague enough in this case for it to be questionable. Lesson learnt I guess.

I'll have to see what the picture looks like that she sent me. I lived there for 6 years and never had to trim those trees. It's like they stopped growing kind of. I think they are privacy trees of some kind, but maybe I just never noticed.

I'm sure I'll update next week or so with more things she wants.

Not all trees need trimming. Certain types do, but it's good to get it done annually (usually before winter from what I hear). You can get free estimates from any lawn/tree service company.

 

[Darwin333]

Da Fuq? $150 in material? I can get 2 gallons of paint for < $60... and that's the good stuff.

Why did you let her pick the materials without a price point? That's insane IMO. I mean, things could be worse, but the way I figure it is this is very early in the game - she might think you will pay for all kinds of shit.

This

While I agree that it's good to reasonably accommodate a new tenant so they are more likely to be "good" tenants it appears, at least from where I sit, that she just took you for a ride. Initially I thought you implied that she agreed to provide the labor free of charge and then you said she wanted what a pro would charge (wtf?).

I wouldn't be surprised if she starts making more requests/demands soon. Be very careful how you tread. I understand that you did it out of necessity but remember it's still a business and you should treat it as such. Currently you have a signed contract (lease) that both parties agreed to, nothing wrong with being accommodating but don't let her push you into the red making improvements that you don't want.

 

[Darwin333]

Update: tenant requested I find a contract to "remove old leaves along driveway and trim these overgrown trees" and that she's split it with me 50 50.

Item 21 on lease states she except property as is. I was nice and got 3 of the rooms repainted, and have her 45 bucks to clean the bathroom and some random stuff out side.

You think I have the right here to tell her in not paying for it? Clause 3 states she is responsible for lawn care, but that I am responsible for.. "all other expenses such as damage, etc" which meant if a tree fell in a storm and needed to be removed from the property, I'd pay for it.

It's vague enough where she might argue that the tree trim counts under that clause.

No way, you have been more than nice.

Just tell yourself "this far and NO further". Otherwise she will bleed you dry. Lawn care is her responsibility, she inspected the property and didn't say a word, she accepted the property as is and signed the lease and you have been more than accommodating already. If you have to just tell her that you are out of "petty cash" and don't want to break into your emergency funds for the house (air conditioner, boiler, roof, etc..). Leaves in the driveway??? You gotta be f'ing kidding me.

You gotta put your foot down or she will bleed you dry as I am sure you already know.

Pine trees, no chain saw needed just clippers. I'm honestly considering going up to do it myself or seeing if my neighbor would do it for like 40 bucks.

I'll ask for a pic. If ladder is needed id hire somebody. But first is to see of its really needed.

Weren't you just there a few weeks ago? They couldn't have grown that much.

This woman is going to $40, $50, $100 you to death bud.

Bc I never really have the upper hand. Hard to be in control when you don't have much leverage.

More Than likely I'll just do it myself

Leverage??? You own the house and have a signed contract with the tenant. Exactly how much more leverage do you think you need in this situation?

I'm not gonna call you a push over because I get that sometimes it just seems easier to make them happy so that they will go away and you don't have to deal with the bullshit. Unfortunately in this case if you do that to many times then it will never go away and the tenant will just start demanding more and more.

Before you talk to her or read a text remind yourself that this is a business discussion and try to make any and all decisions based off the fact that it's a business decision, not a personal one or helping out a friend/coworker.

 

[z1ggy]

I called a tree service, but is going to swing by tomorrow to look. No pictures from tenant as of yet.

Not sure if this guy will be honest about tree condition but yes i was just there about 6 weeks ago. To me they are fine and I feel like legally, that alone is enough to say no, because it's my property and it can be kept to my standards (as long as it's safe).

If it's on the border I might as well get it done if she's paying half. It might have to get done someone soon any way.