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Tenant Thursday - Maryland Real Estate Investing Advice. A Weekly Series on handling Tenant issues when investing in Real Estate in Maryland.

You’ve found the perfect tenant: a single woman with a clear criminal background, good references and clean credit. She’s signed her one year lease. Things are looking good. You make the appointment for the initial walk through and then it happens. She brings her boyfriend. Oh yeah, and by the way he needs to move in because of some last minute change in his current living situation.

How convenient.

What are you going to do? The most important thing is to know what’s in your lease. This will dictate what you can and cannot do in this situation.

My leases specifically state that anyone who is going to live there must be specified in the lease. Any changes must have my prior written consent. Also, all adults who will be living in the home must have a criminal background check and credit check.

This applies to former spouses who move back in, college age children moving home, parents moving in with their children…everyone. I don’t mean to suggest that I wouldn’t rent to someone because of what shows up on the background check. But as a Landlord, I need to know what I’m getting into.

There are no exceptions to this policy, and it is clearly stated in my lease. Do you know what your lease says about who can live there? And do you enforce it?

Photo credit: http://www.flickr.com/photos/umjanedoan/497345293/

Tenant Thursday - Maryland Real Estate Investing Advice. A Weekly Series on handling Tenant issues when investing in Real Estate in Maryland.

You've gotten a tenant for your property, and you've all agreed to a year's lease.  Six months into the agreement, the Tenant informs you that they're going to buy a home and want to terminate the lease early.  What are your options?

I always inform my tenants right up front that if a lease is broken early, the Tenant remains responsible for the monthly rent payment - no if's, and's or but's.  This has helped prevent further issues down the line.  But what if you forgot to mention that part, or what if your Tenant didn't get the message?  Here are some of your options:

1. Stick to the original agreement you and the Tenant made in writing (the lease), and continue to hold the Tenant responsible for the monthly rent (as they contractually agreed).  It's always nice when people honor contractual agreements, especially the ones made concerning the roof over your head.
   
2. Hold the Tenant responsible for further rents until you are able to find another suitable Tenant.  This protects you against further loss while still providing the Tenant with a way out of the agreement.  I can't stress it enough - get it in writing.
   
3. Let the Tenant break the lease.  Get it in writing.  In many cases, the Tenant's future Lender may require a copy of the lease and especially the agreement to terminate the lease.

Or, you could find some other way to work it out.  How would you handle this situation?

Photo credit: http://www.flickr.com/photos/umjanedoan/497345293/

Tenant Thursday: But I'm Not a Real Estate Investor.  Yesterday I met a woman who was interested in selling her investment property.  She and her husband purchased this small, multi-family unit in Arbutus many years ago and had been renting it out ever since.

Recently, her husband passed away.  She's simply not able to maintain the property and keep on top of the tenant issues any more.  She knew that I owned a multi family unit nearby, and contacted me to see if I was interested in purchasing her property.

I asked her how being a Real Estate Investor over the years had benefitted her, and she replied, "Oh, but I'm not a Real Estate Investor!"  It made me smile, and I certainly wasn't about to argue with her, but I have news for property owners:  if you own a home (real estate) in which you don't reside, and you use that home to make a profit (invest), you are in fact a Real Estate Investor.

I guess people think that to be considered a 'Real Estate Investor', you must own multiple properties, develop subdivisions, flip homes weekly and possibly have the last name of Trump.  And while those individuals are also Real Estate Investors, so are you, the single property landlord.  I think it's important to keep this distinction in mind, because as you make decisions concerning your property, you have to think of how those decisions will affect your bottom line.  When you forget that your property is an investment, and treat it like your own home, you can run into a lot of trouble.

Attention Real Estate Investors: follow this blog.  On Thursdays, I frequently post advice about Real Estate Investing.  Right now I am doing a series on common Tenant issues, and how to handle them.  You can also find more content under the topics of Real Estate Investing, Thursday Q & A, and Tenant Thursday.  And you can always contact me if you have a topic you'd like to see covered in the blog.

Photo courtesy of: Eric Rhoads

Tenant Thursday - Bed Bugs in Baltimore.  Ever heard of bed bugs? Yup, they're for real, and they are a real problem.  The cost and inconvenience of removal is enormous.

Last year, one of my tenants in a multi family unit had a bed bug problem.  As an accomodation, I treated the property using a licensed professional and the property was cleared of bed bugs.  The tenant claims they complied with all of the instructions provided to them by the pest removal service.

Fast forward, one year later.  The tenant has bed bugs again.  Fortunately, it is only this one unit.  The other units in the property are bug free.

The tenant works in Baltimore City, and is in and out of the city's high rise project homes.  These homes are notorious for their rampant bed bug infestations.

I've checked with the Baltimore County Department of Health and was referred to the Maryland Department of the Environment who told me to again check with the Department of Health.  I've given up, and am checking with my attorney.

In the meantime, I'm interested in your opinion - in this scenario, who should undertake the expense of this second infestation?

Tenant Thursday - Maryland Real Estate Investing Advice. A Weekly Series on handling Tenant issues when investing in Real Estate in Maryland.

It doesn't happen, often, but it does happen.  You have a disagreement with a tenant over refunding a security deposit, or backing out of a lease, or other financial matters, and the tenant says It - "I'm calling my attorney!"

A novice investor could be concerned about such a threat.  I've had my share of such confrontations in my experience as a Real Estate Investor, and I can tell you that in my opinion, 9 out of 10 times the tenant is not going to call an attorney.

And what about in the rare instance where a tenant does call an attorney?  What is the first thing the attorney is going to ask for?  The presiding document.  In this case, it is going to be your lease.

What you and the tenant have agreed to in writing takes precedence over any other ‘agreement' the tenant may claim you have made with them.  Know the terms in your lease.  Know them before a confrontation arises.  Stick to the conditions you've outlined in your lease, and make any amendments in writing.

If you'd like more information on investing in Real Estate in Maryland, feel free to contact me.

Photo credit: http://www.flickr.com/photos/umjanedoan/497345293/

Tenant Thursday - Maryland Real Estate Investing Advice.  A Weekly Series on handling Tenant issues when investing in Real Estate in Maryland.

Want to hear a tenant mess?  Two friends who want to be roommates, sign a lease for an apartment.  Shortly after they are settled, Tenant One decides to let his girlfriend move in.  His roommate, Tenant Two, hates the girlfriend and decides to move out.  I continue to get the rent, but then a month later, Tenant One kicks the girlfriend out and is no longer able to afford the apartment.  Tenant One said I could have the security deposit, but that he doesn't want a judgment, bad credit or a bad reference from me.

In the meantime, Tenant Two would like to move back in to the apartment, but would like to have Tenant One's name removed from the lease.  The only problem is that Tenant Two wants to add someone new to the lease - a new roommate - who has bad credit.

As a Landlord, how would you handle this situation?  Email me to find out how it all got resolved.

If you'd like more information on investing in Real Estate in Maryland, feel free to contact me.

Photo credit: http://www.flickr.com/photos/umjanedoan/497345293/

Thursday Q & A - Your Maryland Real Estate Investing Questions Answered

Q:  What expenses should I plan for when selling an investment property that I have rehabbed?

A:  The only way to handle this is to Do Your Best to Plan for the Worst.  You need to know ahead of time how far you are willing to go to help the Buyer buy this home.  Will you offer:

• Maximum Closing Costs (Currently FHA loans allow up to 6% of the purchase price, and VA is unlimited)
• Seller Financing
• To make necessary improvements

Keep in mind the current market conditions and what they call for.  If you would like a detailed list of settlement expenses for your investment property, or help in making a plan to sell, please feel free to contact me.

Thursday Q & A - Your Maryland Real Estate Investing Questions Answered

Q:  I've found a property that seems like a really good investment deal.  The only problem is that the Seller wants a quick settlement and doesn't want a lot of contingencies in the contract, or to have to do any bank related repairs.  Is it still a good deal?

A:  Is it still a good deal? It could be, however, it's only as good as what you can sell it for later.  This has a direct effect on what you're buying it for now.  If the Seller doesn't want any contingencies, tell him you have to have an inspection and that you'll take a few DAYS to get it done.  That way, should anything come up, you're done with it quickly and both you and the Seller can move on.

Buying your first investment property can be tricky.  If you have questions, or need advice, please feel free to contact me.

Thursday Q & A - Your Maryland Real Estate Investing Questions Answered

Q:  I'm thinking of purchasing an investment property that was built in 1942.  What are the concerns about lead based paint?

A:  Any property built before 1950 has to be registered with the EPA because of the concern over the presence of lead based paint.  There are still Agents listing properties and representing Sellers that haven't taken this step.

My advice:  if you are purchasing a pre-1950 property as an investment property, make the Seller register the property with the EPA.  Otherwise, you  could be buying a lead paint problem.  AND...if there is a tenant in the property, you are putting yourself in a legally vulnerable position.

If you'd like more information on investing in Real Estate in Maryland, please feel free to contact me.

Thursday Q & A - Your Maryland Real Estate Investing Questions Answered
Q:  How do I go about purchasing a home at foreclosure auction?

A:  So far we've talked about due diligence, and what to do on the day of the auction.  Today, it's time to talk about the Bidding Process.  The most important part of the Bidding Process in a Foreclosure Auction is keeping your emotions in check.  The Auctioneer's job is to get people to pay more money for the home.  You've got to be able to keep your head on straight and remember that this home is an investment - you're not going to live there.

Before you go, know exactly how much you are willing to pay at the foreclosure auction.  If you're not comfortable committing to a specific number, have your ideal number in mind, and consider going a specific percentage above that number.  Use this method to figure out the most you are willing to pay for this home, and don't go $1 over this number.

It is especially important at a foreclosure auction that the auctioneer reads the entire ad.  Request it if you have to.  In the case of a foreclosure auction, if you purchase the home for less than market value (which you'd really like to do), the Homeowner can dispute the auction process (particularly if your purchase price is drastically less than market value).  My attorneys have explained to me that in cases like this, that a Judge will probably rule in favor of the Homeowner because the process wasn't followed, and the auction will be invalid.  Judges don't want to see people losing their homes if they don't have to.

The Bidding Process begins after the reading, and it goes very quickly.

If you'd like more information about purchasing a home at foreclosure auction in Maryland, please feel free to contact me.