Solving Landlord Problems: Q&A Episode

Thank you to those who have submitted questions and trust in us to answer them!  We have listener questions this week that run the gambit, including:

·        Who is responsible for paying to eradicate pests when the pests appear after a tenant has moved in?

·        How to handle an elderly tenant who doesn’t want to move out of a potentially uninhabitable rental property that was recently inherited?

·        What is our best advice when an investor purchases their first rental property?

·        How is it best to handle it when a tenant leaves before the lease is up and refuses to return the unit keys?

·        And we addressed an email from a listener who had questions and needed clarification regarding an episode we put up a few months ago on tenant screening software.

We also addressed a comment left about our podcast and did our best to clarify this listener’s feeling that our content misinforms real estate investors.  

This episode is full of advice on how we would handle certain issues, where others can find assistance with resolving their problems that arise as landlords, and how best to ask us your questions and get a prompt response.

LINKS

👉 Episode 15: Is Holding Your Rental Property in an LLC Right for You?

👉Episode 46: Advanced Tax Strategies

👉 Episode 84: Tenant Screening Software, What Landlords Need to Know.

👉Turbo Tenant Landlord Software, Perfect for new or small rental property investors

👉 KwikSet Smart Key. Rekey your unit locks yourself in minutes for less than $10!

Connect with Us:

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📩Email us at: Stacie@YourLandlordResource.com, Kevin@YourLandlordResource.com

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Transcript

Stacie: 0:00

​I will say that I do appreciate that the listener emailed us and asked us all about that. And this is why in the show notes we have the information for how to text us and, and that we also give out our emails. If we say something that doesn't make sense or you research something that we have said and need more clarification, please reach out and let us know. You guys, we're not media experts. We're not professional speakers. We are very experienced landlords and rental property owners just doing the best we can to communicate our experiences to you all. And I tell you, being in this position is humbling. We are very happy to be able to help other landlords and guide them on their journey of owning rental property. But we wanna be clear when we give advice or discuss our experiences, that is for informational purposes only. We will always recommend that you seek professional advice from your licensed team members.

1:00

Welcome to Your Landlord Resource Podcast. Many moons ago, when I started as a landlord, I was as green as it gets. I may have had my real estate license, but I lacked confidence and the hands on experience needed when it came to dealing with tenants, leases, maintenance, and bookkeeping. After many failed attempts, fast forward to today. Kevin and I have doubled our doors and created an organized, professionally operated rental property business. Want to go from overwhelmed to confident? If you're an ambitious landlord or maybe one in the making, join us as we provide strategies and teach actionable steps to help you reach your goals and the lifestyle you desire. All while building a streamlined and profitable rental property business. This is your landlord resource podcast.

Stacie: 1:49

Hey landlords, it's been a minute since we've been on here. Uh, thank you for your patience with the little break that we've taken. I wanna come right out and say that Kevin and I have taken some time to reevaluate Your Landlord Resource and where we are going to put our time. And where we don't wanna cut back on our content. We are feeling to need to do that.

Kevin: 2:13

Well think of it more as if we want our content to be more focused and intentional. I mean, our lives are getting busier and we have family commitments that are taking precedence at this time, which means we have less time to put out social media every day because that's what the algorithm wants. It also means that we will start back with the podcast once a month until we feel we can do more. And to be honest, we held on at a very high level much longer than we actually should have. But we still have over 90 podcasts and I believe over a thousand social media posts that are loaded with tips and tricks and great products specifically for landlords. We also have a newsletter that we send to our subscribers, which is free by the way, and includes a tip, uh, product recommendation and three articles that focus on landlord specific subjects. But we do realize some people aren't podcast people and wanna read what they're interested in and that some people prefer to listen over reading a blog or a news article. So we're in a place where we are working to see if we can appeal to the masses in our own way, not ways that are dictated by others.

Stacie: 3:32

And in that newsletter, we never really have included much from us personally, other than, you know, the tip, we're thinking about now, including something that kind of talks about what we're working on or what has gone well and maybe not so well in our adventures as rental property owners. And I know that's the purpose of this podcast, but we now wanna share it more in like a letter or a blog format for people to read quickly, like in a minute or two. And where we have been publishing that newsletter weekly, we will now move that to biweekly and include a small section on our wins and losses. If you're not a subscriber, you can check it out at yourlandlordresource.com subscribe. And guess what? If you find it something that you don't like, you are free to unsubscribe at any time. Okay, so in this episode, we are going to go over some questions that have come in and do our best to answer them. First off, we have had a couple people suggest that we have misinformed our listeners. The first one was left as a comment under our reviews and addressed episode number 46 about advanced tax strategies. And this listener claimed that we gave potential misinformation. And the review reads, I am about halfway through the advanced tax strategies episode and have heard information that is the opposite of what I have heard on other shows. I have heard several tax professionals say that owning a rental in an LLC provides no tax advantages over owning it in your personal name. So I'm gonna stop here and I'm gonna address that part first. At the beginning of the episode at two minutes and 45 seconds in and on several other episodes, we give a disclaimer. We specifically express that we are not tax professionals and to seek advice from your personal advisors to determine if, like in this case, whether or not putting your rental in an LLC is beneficial for asset protection or for tax benefits for your circumstance. We all have different circumstances where yes, taxation for LLCs and for solo proprietors have very similar deductions and advantages, there are advantages to holding an LLC that can outweigh holding your rental in your personal name. And full transparency here. Mine or our combined properties of which we own 10 rentals alone are worth over$5 million. So for us, having the legal protection of all of our assets was worth it. Again, that was for us. If you own a duplex and you live in one side and you rent out the other and the total value of that property is worth$300,000, then no, maybe for you it is not worth protecting that asset. Maybe your income stream is such that you get no tax advantage one way or the other from holding your rental in an LLC. We have our reasons and they work for us. Which is why we give the disclaimer recommending to our listeners to research what is best for their situation.

Kevin: 6:47

And let me jump in here real quick and say that we are also in California, which is a highly litigious state that favors tenants. Stacie and I have a lot to lose if one person gets injured or worse. And yes, we do have a sizable umbrella policy to cover us as well.

Stacie: 7:07

Right. All right. Let me finish the review now. He goes on to say, they also state that the losses from the rental property can offset your W2 income, which is partially correct. It continues with, there are limits to the losses you can take unless you are a real estate professional in the eyes of the IRS, and you can't be a real estate professional if you have a full-time W2 income. All right, I'm gonna stop again. And yes, this person is correct and if they had continued to listen to the remainder of the episode, they would've heard a very long and detailed explanation all about becoming a real estate professional and how you qualify and, and how it works, and we give some tips on, on how to do that. The comment goes on to discuss LLCs as disregarded entities and may not offer asset protection. So I'm not sure where this person is getting their information. We cannot find anything to support this. As an LLC, all of your financial dealings, registered paperwork, et cetera, are in the name of the LLC. If you run your business clean and do not co-mingle funds from personal accounts and the LLC, then there should be no question that the LLC is a separate entity from the person's personal assets. And we could be completely wrong here, but for us, this is what we have been advised by our attorney. And the comment finishes with that it's important to note that owning property in an LLC can limit financing options, and we completely agree with this. I believe we did discuss this in detail in episode 15, Is Holding Your Rental in an LLC Right For You. So if you guys wanna check that episode out, we're gonna link it in the show notes, or you can go to your landlord resource.com/episode 15. You wanna spell out the word episode. I think the one thing I wanna say is that if you feel we have misinformed you on a subject, please email us and ask us to explain why we said what we did before you question us publicly without even finishing the whole episode. Our emails are linked in our show notes for every single episode. That's Stacie with an ie@yourlandlordresource.com or kevin@yourlandlordresource.com.

Kevin: 9:28

Yeah, so where we appreciate that this person wanted to warn others to basically take what we say with a grain of salt. Yeah, please do. I mean, we have a lot of experience with being landlords and buying and selling properties, but that experience only applies to what we want out of our rentals and how we run our business. You do you. We are here to give you information so you can take that as inspiration to process and research on your own, on how that would work for your situation. And hey, we do appreciate comments, especially the nice complimentary ones. They really help our podcast grow and we hope we would receive more of those. Just remember, you are receiving this information and guidance for free, like I said, use it as inspiration to see if something might work for your own rental property business. On that note, we did receive an email recently from a listener who was asking for more clarification. And you guys, they were correct, we misled you on this one recommendation. The email reads as follows. I started listening to your podcast a couple weeks ago on a couple episodes I listened to today, you mentioned the lease guarantee through Tenant Alert for$200 per year with a$10,000 protection. I went on the Tenant Alert website and it appears the cost for lease guarantee starts at$299 a year for$2,500 worth of protection and ranges up to$1,196 a year for the$10,000 protection. Am I missing something? Is there a different rate once I use their service for tenant screening as well? I would think that would be advertised. Your episode seemed fairly recent as well, less than six months ago. I love your podcast, but feel it is important to receive accurate information. Okay, in episode 84, Tenant Screening Software, What Landlords Need to Know, we were discussing different options for tenant screening. We were discussing that we use Tenant Alert to process our background checks and that they offer a lease guarantee. And here's what we said. They rate the applicant on a scale of a hundred and offer a lease guarantee for up to$10,000 of protection against damages, lost rent, or legal fees. And that starts at$199 a year that you or the tenant can pay. And you know, it did come out like you can purchase$10,000 of coverage starting at$199 a year. So when this listener went on to check it out for themselves, they found the pricing much higher. And that is because we failed to say that one, when you just go on to buy the lease guarantee coverage without going through the process of tenant screening, the cost is significantly more. You can just buy coverage at any point in the lease at the highest rates. And two, if you use a tenant screening software that offers lease guarantee coverage it can offer you a discounted rate that is determined by the outcome of the screening report. And that coverage is only valid for 10 days after the background check was processed. After the 10 days, the cost goes back up to the regular published amounts, which is what the listeners would see if you went on to the screening app and checked it out. The tenant background check that Stacie had run was spotless, so she was offered the best coverage at the lowest rates. During that episode she just spoke about her experience and should have been more clear about the different options.

Stacie: 13:16

Yeah, and I will say that I do appreciate that the listener emailed us and asked us all about that. And this is why in the show notes we have the information for how to text us and, and that we also give out our emails. If we say something that doesn't make sense or you research something that we have said and need more clarification, please reach out and let us know. You guys, we're not media experts. We're not professional speakers. We are very experienced landlords and rental property owners just doing the best we can to communicate our experiences to you all. And I tell you, being in this position is humbling. We are very happy to be able to help other landlords and guide them on their journey of owning rental property. But we wanna be clear when we give advice or discuss our experiences, that is for informational purposes only. We will always recommend that you seek professional advice from your licensed team members. What we discuss happens here in California, or with our Idaho property, applies only to our experiences. City landlord tenant laws may differ from county laws and can be absolutely different from state laws. Everywhere in every state the size of your rental property matters'cause laws and ordinances for single family homes may differ from duplexes or triplexes and fourplexes. And five units or more may have and usually do have much stricter landlord tenant regulations that you need to follow.

Kevin: 14:46

And let me jump in here again and say that if you have real estate questions or questions about laws regarding landlord tenant laws, try reaching out to your Realtor. If they don't have the answer, usually they'll know a Realtor who specializes in property management, who does. Go that route before you engage with a lawyer. I mean, they are expensive and will charge you hundreds of dollars regardless of what you ask. So do what you can to get as much local legal information as you can before you employ your legal counsel. Also, many rental property association groups have points of contact for you. Now we've mentioned before that we're members of the California Apartment Association, and yes, this membership costs us several hundred dollars a year, but you know what we get? We get free state and county specific leases that can be filled out online and have the option of electronic signatures. For us it makes leases and renewals easy peasy. We have electronic files for each property and tenant where we can keep all the leases and addendums. Not the signed versions, but the originals, which we often will refer back to. We get notifications, multiple ones, when there is a landlord tenant law change. When there is a bill on the books that is not in favor of landlords, like changes to our rent control laws, we are given information on how to contact our local congress person and express our concerns. And usually it's just the click of a button and it's sent off. We also get free legal guidance. They have actual real estate lawyers that answer the phone and advise you on how to handle a situation. And usually they can advise what form or what law applies to your situation. Now they do not do the work for you, but can direct you on if there is a legal issue and you need to contact your lawyer, or if you can handle it yourself with a specific form following certain guidelines. I think there's a limit on how many calls you can make during a calendar year, but that right there pays for itself if you only use it once a year. So don't sleep on those rental housing associations, there is usually some good value there.

Stacie: 17:06

Yeah, we fell into that CAA membership years ago from when we were part of the Sacramento Rental Property Association, and many of the local associations were merged into this one California Apartment Association. And for us, it's been very beneficial. All right. Next question we can answer. This was a texted question that we received from Cherie. She inherited a 1978 manufactured home that needs a new roof and septic system, as well as other work. It was paid off, but has been seriously neglected. She feels the house is not suitable for housing, but the elderly tenant loves it there and doesn't wanna move. They had just renewed the lease shortly before she had inherited the property, and the tenant has nine months left on the lease. Cherie was stressed out and looking for advice regarding how to deal with his tenant, who doesn't want to leave. So I did fire back some questions about the condition of the property and you guys, she is correct. From what she's saying the roof leaks and is sagging. There are water stains on the carpet. The flooring is certain areas is soft, so the tenant avoids walking on them and the toilet clogs up every few weeks. The tenant was told by the previous owner to not flush any toilet paper. When she first texted she said that there were blackberry bushes growing up and around the mobile home and those blackberries were complicating getting that septic repaired. She has since removed much of those bushes and was able to get an inspection by the city, which to no surprise failed. So Shari is in a position where she's housing a tenant in a rental that potentially has mold and even asbestos. She considered purchasing a new trailer to replace the old one, but with the new noise ordinances in Washington, I believe she's near or under a flight path, the one she would have to purchase is$180,000. So I will give her this, she's done her research and has options, but the bottom line is how does she handle the situation with the elderly tenant in a rental that she feels is uninhabitable? It appears that there are not really renovations that could be completed while the tenant remains in the unit. She did share that the tenant only pays a thousand dollars a month for rent, and for them to find a comparable home, would cost them much, much more than that, so there's that dilemma as well. And the bottom line is how do you get a tenant to move out of a dilapidated property? So in this case, I would do one of three things. If you need to get the tenant out in order to do necessary repairs or even remove the trailer completely, you can buy them out of the lease. And you likely would have to not only give them the rent that would be owed on the remainder of the lease, but an additional amount to help offset the increased rent that they would face. Clearly this elderly tenant does not have the means or capability to find a rental that they can afford, so I would do whatever I could to help this person find a new home. They clearly love the area and the openness of the land around the trailer. So is there another trailer rental in the area that you could work with the landlord to secure for the tenant and help them move? The other thing I was going to suggest was having them move temporarily, do the minimum repairs needed, and then allow them to move back in. But I would imagine in order to recoup those repair costs, you're gonna need to increase their rent to more than a thousand dollars a month. If they have family, maybe you can discuss the issue with them, although if they know she's living there and have visited, they can see that the shape that the place is in, and if they haven't tried to help yet, it's unlikely they're gonna help now. Another thing to consider is, are there any public programs in the area that can help? You know, sometimes there are groups to assist the elderly that can provide low-income housing. And the third thing would be to allow the tenant to continue living in the rental until their lease is up. Giving them notice now that you will not be renewing the lease, potentially condemning that home come September when that lease expires. That gives them nine months to speak with family and friends and to find another rental. And listen, Cherie, we know you're a good person. You clearly care about the wellbeing of this tenant, and you do not wanna put'em in a hard place by making them move. So kudos for that. Unfortunately, you are putting yourself at risk of something happening to that tenant where she gets injured stepping on that rotten floor, or if the ceiling drops in from dry rot or excessive water. This is what you have to express to the tenant, and maybe the two of you can reach a mutual agreement and outcome that satisfies both sides. FYI. We just had a similar issue with an elderly tenant in Idaho. His wife had passed and the space was much more that he needed, and he vacated recently because his granddaughter decided that it was best for him to go into a home after he had lived in our unit for nine years. When we got there to evaluate the upgrades that we wanted to do, we were shocked at the condition of the flooring and the appliances. You guys, his dog had urinated everywhere and some people just don't mind living in what we would all consider filthy conditions. And we have learned, this is especially true of the elderly. The stress of packing up and moving to a new clean home is more than they can handle. For reference, we did have the carpets clean last year, and they were just so bad and needed to be replaced. You know, the appliances all worked fine, but they were small and they were dirty, there was some rust on'em, so they did need to be replaced. You know, inspections of the unit showed everything working, and when the tenant was questioned, if there was anything that they felt needed to be addressed, they always said no.

Kevin: 23:12

Yeah, and that's one of the units we just did a bunch of work on back in December. Alright landlords, we need to take care of our elderly tenants. Often they don't have family checking in on them and making sure they're okay. So make sure you're doing semi-annual inspections to see that everything is in working order. Do things like change the air filter for them as well as the batteries in their smoke detectors.

Stacie: 23:39

Oh lord do not allow the elderly people to get on ladders or chairs to do that.

Kevin: 23:44

Right. You know, you might wanna bring'em a cupcake on their birthday and make sure they have a meal on the holidays. A little kindness goes a long way, especially for our elderly citizens. Okay, we have a couple more questions to get through. This one also came through our podcast text system. And a quick reminder, if you prefer to text us, you have to give an email for us to respond to directly. When you text via the click to text button on our show notes, that is a one-way texting only system. Buzzsprout, which is who we use to publish our podcast, offers the service, but unfortunately it doesn't allow us to text back. So if you text us, regardless of whether you use the link on the top of the show notes or if you text the phone number we have listed, please give us an email address to respond to. Okay, moving on to the next question. The person asks if a tenant is long-term renting my entire house, am I responsible for eradicating a cockroach infestation, or is the tenant? The short answer is, as a landlord, you are generally responsible for eradicating a cockroach infestation, even if the tenant has been living in the house long term because it falls under,"implied warranty of habitability", which requires you to maintain a livable space for your tenants. And that includes addressing pest issues like cockroaches. However, the specifics may vary depending on your local laws and lease agreement. Now, most jurisdictions consider pest control, including cockroach infestation, to be the landlord's responsibility, meaning you should take action to eliminate the problem if it arises. And while you're responsible for eradication, tenants should promptly notify you if they notice a cockroach infestation. With all of that said, we always recommend to check your lease agreement and see if there are any specific clauses regarding pest control responsibilities. Some states will have information on how to handle pest control and who is responsible for payment, should it be determined whether the tenant is the one who caused the infestation. Like California has done this with bedbugs. In certain situations, if at tenant's poor hygiene practices significantly contribute to the infestation, you might be able to argue that they share some responsibility. So if you encounter a cockroach infestation, here's what to do. One, immediately arrange for a professional exterminator to assess and treat the problem. Two, inform your tenant about the infestation and the steps you are taking to resolve it. Communication is the key here. Always have written notes and emails of exactly what was said, to whom it was said, and when. Three, investigate potential entry points for cockroaches and take steps to seal them up to prevent further infestations. Let me tell you, with any pest infestation, you need to take it seriously and act quickly. Do not ignore it, or you could face charges should your tenant contact the authority saying you were allowing them to live in an uninhabitable unit.

Stacie: 27:15

Kev, do you remember when we got reports of cockroaches in Sacramento? I mean, I remember going in to look for leaks under the sink and finding a dead roach there when, and I totally freaked out and I think that's when we started using the pest control company to come and spray the perimeter of the property.

Kevin: 27:32

I do, and what I remember is when our long-term tenant, he'd been there for what, like nine years at that point when he contacted us and said cockroaches were coming up through the shower drain.

Stacie: 27:45

Oh my God, that was a deal breaker for me. I cannot believe he called and very calmly told us about that.

Kevin: 27:52

The thing is, we had nothing we could do about it because they were coming up through the sewer. I mean, we did call the city, as did he, and complained, and it might have happened once or twice again, but eventually it did go away.

Stacie: 28:06

No freaking way. I mean, if I was in that shower and one of those things crawled out, I would've screamed like the lady in the shower from that movie Psycho.

Kevin: 28:14

Well, maybe Alfred Hitchcock should have made a movie about cockroaches. I mean, he did make one about birds, right?

Stacie: 28:20

Yeah. No, no, thank you. No, thank you.

Kevin: 28:23

Alright. All right. Let's get uh, back to talking about our answer. Now, we usually don't do this, but we do wanna address this from a tenant's point of view, so that you can all understand how this could become a legal problem. If a landlord fails to address a severe cockroach infestation, a tenant can sue for damages related to the uninhabitable conditions. And this would include compensation for the cost of pest control services they hired themselves, relocation expenses if forced to move due to the infestation, medical bills, if the roaches caused health issues. Property damage from the infestation, emotional distress, and potentially even the termination of their lease without penalty, which depends on the jurisdiction and severity of the issue. Like we are suggesting to you guys, tenants will also be advised to keep detailed records of all communications with the landlord regarding the infestation, including dates, times, and photos of the roaches. Most jurisdictions have a quote unquote warranty of habitability law that requires landlords to maintain a dwelling in a habitable condition, which includes controlling pest infestations. Tenants know this and will have no problem contacting the authorities if you are not responding, communicating, or acting fast enough to resolve the issue. The good news is that before taking legal action, most authorities will advise the tenant to try to resolve the issue directly with the landlord by giving them a reasonable time to address the problem. Some locations, this time limit can be a couple of weeks to up to 90 days. It all depends on where your rental is located and what the pest is. And you should all absolutely know that if the infestation is severe and you as the landlord are not taking action, tenants will be advised to consult with an attorney to understand their legal options and potential claims. Let me tell you, you do not wanna get to this point. Sometimes regardless of whose fault it is that there is a pest infestation, it's just cheaper to pay for the extermination than fight it out in court. Once it reaches the point where authorities question whether the unit is uninhabitable or not, usually the tenant is no longer required to pay rent until the issue is resolved. So no rent coming in and astronomical legal bills is what you'll be facing. Just go in, resolve it, and should it be determined that the cockroaches or any other pest for that matter was caused because of lack of cleanliness you can absolutely require them to sign an addendum saying that if the issue arises again, they will be responsible financially and otherwise for the eradication. You might have to wait until their renewal to add that in, if you decide to renew their lease, but you can use an addendum to add that in.

Stacie: 31:30

And you guys, that's exactly what addendums are for, to include information specific to your unit that is not covered by the main body of your lease. All right, we have one more question and then we have one that's a really quick one. So this was a question that we received on our DM's from Instagram and the follower asked, what advice would you give to someone buying their first rental? But funny you should ask. Kevin and I just flew back to Idaho to meet with and walk through a duplex that our middle son is buying as his first rental property.

Kevin: 32:06

Yes. Very exciting times.

Stacie: 32:08

Yeah, I mean, he's nervous as hell, but super excited to get that first rental under his belt. But here was our advice to him. Obviously run the numbers and have a really good hold on what the expenses are gonna be. Know what the county or the province is gonna charge for property taxes and get quotes on liability insurance. Being a duplex and an investment property, the insurance rates are gonna be higher than for an owner occupied single family home. With the mortgage, those will be the three biggest expenses to account for. Know about utility costs. So for this property it was electric only, no gas, and both units had their own meters, so he will not have to deal with paying the electric bill on their behalf. Same goes with garbage or trash service. With two units, you can have them each get their own service or pay, and you can add that as a fee in the lease. So one expense he wasn't sure of was landscaping. This particular property has a lot of grass, and I believe it also has two large trees. So there's gonna be a need to mow and blow every couple weeks. Depending on what level of service you want, that can cost upwards of a hundred dollars a month or more. So understanding how much time that you're willing to spend on regular maintenance is important to know. We also told him don't expect a lot of cash flow right off the bat. If you can earn a few hundred dollars after accounting for expenses and reserves, you're fine. You're not gonna retire or quit your nine to five off one rental. As time goes on, your mortgage should stay the same, but you'll benefit from rents increasing. And expenses will also increase as well over time, but usually rents will outpace those cost increases. And a quick side on reserves, don't sleep on those. So unless you set aside a large amount of money at the time of purchase for emergencies, you will need to use rent money and profits to build reserves up for those unexpected expenses. And they absolutely will happen. So make sure you have a way to pay for'em. When looking at the property, see if it has potential for added value. You know, it doesn't need to be something you jump right into, but this particular property sits on a larger lot. It's located on a court and is in the back corner of the circle, so it has a bit more land than its neighbors. And why does that matter? The city of Boise is encouraging investors and homeowners to add ADUs or additional units to their property if the zoning allows it. And this property definitely has potential to add one or two more units to it. Which is something that he might consider down the line, but to be able to increase rents without having to buy a whole new piece of land, and obviously depending on the construction costs, it might be worth it if he can create a fourplex out of that. The next thing that we talked to him about was about knowing the area, you know, what's around there that might be a benefit to the tenant. Are there schools nearby for family tenants or a large hospital, like a medical facility, government offices, or large corporate businesses so that tenants can live close to work. And in this case, the duplex is about a half mile away from a large hospital and medical facility. It's also only about a 10 to 15 minute drive to downtown Boise, which is the capital of Idaho, and it's close to Boise State University. Not close enough for students, but for faculty and staff to be able to get to work within 10 minutes. His Realtor, who's also our Realtor, suggested that because of the proximity to the hospital and the medical center, he might be able to convert a unit into a midterm rental and earn more rent. Again, maybe down the road, but definitely a possibility of added value. And the other thing is there's a lot of other rentals in the neighborhood, so he's able to get a really good idea on the rent comps for that area as well. If the units need work, do the minimum that you need to do to get them rented and start earning income. So in this case, one tenant will be moving out with the sale of the property, so he will have the chance to work on that one unit and prep it so he can maximize the rent. So when you buy a property, your first mortgage payment can and usually is included with your closing cost. So this means that your first payment may not be due for up to six weeks after the close. And that gives him time to go in and paint, replace flooring, and give the place a real good cleaning before putting it on the market for rent. Which leads us to finding a tenant. You won't wanna hear this, but sometimes it's better to have an empty unit than one with a problem tenant. So make sure that you take the time to properly vet and do background checks on any tenants. You wanna pre-screen, do a full tenant screening and have a solid lease.

Kevin: 37:15

You know, we'll be helping him out with that, right?

Stacie: 37:18

Yeah, I mean, I'd hope so. I mean, I, I do want him to do the work so he can learn, but I wanna be able to show him what's good and what's bad and you know, what to look for. I'll share with him all of our tenant screening templates as well. He mentioned he wants to get a Turbo Tenant account going, which I think is very smart. You know, you wanna automate your rental property as much as possible from the beginning because it's actually kind of hard to switch once you're doing it manually.

Kevin: 37:45

Yeah, and we've been partners with Turbo Tenant for a while now. We love them for newer rental property owners, just like the situation with our son, because many of the services are free. These would be expenses that a lot of landlords do not include in their budget, like some of the costs associated with finding a new tenant. Advertising your rental property is completely free and it goes out to dozens of rental property sites like uh, rent.com, apartments.com, Redfin, you know, like that. I mean, you create one ad and turbo tenant gets it out to all those sites for free. Those are sites you normally would have to have a subscription to, and that's a lot of money actually. They handle tenant applications and screening. Also, no cost to the landlord. They have an option where you can have the tenant pay for this service, so you never have to handle reporting or recording the receipts of these fees. Collecting rent is always free for landlords. Only tenants will pay if they choose to use a credit card for payment. Otherwise, ACH, which is our recommended method, is no charge. He did mention he wanted to upgrade to a premium account because they provide unlimited personalized leases for less than$10 a month. I mean, this is huge for DIY rental property owners. Regardless of the state where your property is located, you are covered by state specific leases and addendums. He could use them on an as needed basis too, because they offer custom leases for$29 each. Now, if he was in California, we would give him the lease and addendums to use, but we do not have access to Idaho State specific leases, so that's why Turbo Tenant would be good for him to use.

Stacie: 39:39

Yep. And I also like how you can manage your rentals and organize your documents all in one place. You don't get a website, but they have a cloud space where you can organize your files and keep those documents for easy access. I mean, efficiency is key with Turbo Tenant and he will be able to streamline his rental property business because they now have features such as in-app messaging with tenants. That's, you know, a really good way to handle maintenance requests. Plus he can upload and store their rental insurance information as well. I believe those are available with the upgraded version, which I think you pay an annual fee that comes to just shy of like 10 bucks a month, like you said. And if he wants to have tenant screening services and electronic signatures, I think it goes up to around 12 bucks a month. You know, listen to you guys, Turbo Tenant is perfect for newer investors like our son. They offer really great services that are easy to navigate and at a cost that does not break the bank. So we'll link them in the show notes if you wanna check'em out and see if they're right for you. All right, the last bit of advice that we had for our son and for others looking to buy their first rental property is to set your policies for each property and stick with it. If you want a policy of no pets or no smoking, don't let someone sweet talk you into changing your mind. Also, you wanna set yourself up with a CPA who knows and understands real estate investing and the tax laws, more importantly, the tax benefits of owning them. So this is something that our son did last year when he first started looking for his first rental property. He actually met with his CPA this week to do his taxes and discussed the property with him and was able to get some good sound advice on how to handle a few things. We also suggest that you do regular inspections. Semi-annually is what we recommend. Just get in there and you wanna look for leaks, evidence of rodents or unauthorized pets, and even unauthorized roommates. Make sure that the air filters are being replaced'cause this alone can extend the life of your heaters and air conditioners. Make sure the smoke detectors and carbon monoxide detectors are working. Shockingly enough, hand on a Bible, neither of these units we walked through had working smoke detectors and they didn't have any fire extinguishers in them or on site. And you guys, that is a major violation. You know, if it's possible, hire your contractor to do inspections with you for an hour or two because they know exactly what to look for, especially when it comes to leaks or anything like that. And they can estimate what needs to be done to remedy an issue and also estimate the cost. All right, we're almost done. If you can find a Realtor that specializes in rental properties, even better. You know, for us in Idaho, our Realtor owns his own rentals and is a flipper. He's a licensed contractor who not only knows the market, he has a whole Rolodex of subcontractors for us to call on when we need to get work done. And we used several of them back in November and December when we did renovations to our fourplex back there. You know, he's a great resource to have. Lastly, join local associations to meet other landlords, tradesmen, Realtors, CPAs, et cetera, to build up your team if you don't really have any other contacts. Often meetings will be held where you can network and meet others who are either in the same place as you, or they might be able to get you where you wanna be. Be careful to research the associations though,'cause some are there to profit from you and lure you in with their own dealings. Uh, we learned that one the hard way. Uh, for one group that we paid to join.

Kevin: 43:29

Yeah, luckily we didn't pay too much, but one meeting in and we were like, uh, yeah, I don't think so. All right, that was all good advice on buying your first property. And to be honest, we have been mentoring our son for some time now. We flew back for a quick overnight trip to do the initial walkthrough with him and show him what to look for. But this property in particular has a new roof, newer siding, and new air conditioners, so a lot of the big ticket items are covered for a while. It had really good bones and very good potential. So he has moved on to the official inspection by an outside source, so we'll see what that brings in. The numbers worked. We just need to see if there's anything structural that was going on. One last real quick question to answer. Someone asks, my tenant is leaving before the lease is up and he's refusing to give me my house keys. What do I do? I'd ask the tenant via email or text when they are leaving, so you have something in writing. Then on that day, I'd go to the property after he has left and do an exit walkthrough where you assess the condition of the property to see if there is any tenant cause damage or issues. Then since he is refusing to turn in the keys, I change the locks. But I would suggest you contact an attorney that specializes in landlord tenant laws in your area first, because if they are still under a lease contract you may not be able to change the locks and essentially lock them outta their unit. Of course, if all their belongings are gone and they have clearly moved out, you should be fine. But always check to make sure when a move out happens before the lease is ended. It should be written in the lease that they have to return the keys or else they have to pay to replace them. And this includes re-keying the locks. If it is indeed included in your lease, you can take the expense you incurred from their security deposit. We get it. It's a total pain in the neck, especially when there are multiple keys for the main entry, gates, mailboxes. I mean, we had a tenant take them upon move out by accident, and then when we asked him to mail them back, they were lost in the mail. I mean, not a real big deal for the unit because we changed the locks anyway, but he did have a mailbox key that was lost and those aren't easy to replace.

Stacie: 46:00

Yeah, there's something with that unit and lost keys. I mean, it's happened like four times so far, and that's just that one unit. The other five units, knock on wood, never had we had an issue or lost keys or returning'em or anything.

Kevin: 46:15

I know, right. One quick aside on how we handle re-keying our locks. We used to call a locksmith out to the tune of about$75 a lock, but our contractor showed us that if we use Kwikset locks, we can use their rekey system and rekey the locks ourselves for like six bucks. We will link the Kwikset Smart Keys in our show notes so you can see what we are talking about. We even are converting to keyless entry systems. They still have a key but allows us to give access to contractors and subs without the worry of a key walking off or getting lost.

Stacie: 46:52

Which is exactly what happened multiple times in Idaho when we were using the lockbox back there. The painter took it one time and then we couldn't get in. The floor guy took it another time and then the painter couldn't get in. It was a freaking hassle.

Kevin: 47:04

Oh man, yeah I forgot about that. Maybe because they were calling you, huh?

Stacie: 47:09

Yeah right.

Kevin: 47:11

But the keyless systems we are installing are by Kwikset and they have that easy re-key option also, so we can rekey those easily after a tenant moves out.

Stacie: 47:22

Yeah, I mean, I'm looking forward to getting all those on the units. Uh, you do need internet to use them, so that's kind of what the delay is at this point, but we're getting there. All right, you guys, that's our episode for today. We will go ahead and link all the information we discussed in the show notes for you, including the ways that you can reach out to ask a question via text or email, sign up for our newsletter and to check out Turbo Tenant Landlord Software and the Kwikset Smart Rekey set that we use. We would love it if you'd leave a kind review letting others know what you like about our podcast. There's a link in the show notes for that as well. We will be back with another episode soon, definitely within a month. So until then, you've got this landlords.