Why You Should Buy a Rental Property…

I came across this post, Why You Should Buy a Rental Property and when I read, “The best investments we’ve made are the ones no one else would touch.” I can see why David Ackman is hot on the Single Family Home Rental Property.  “They are cheap,” he says.  “They are a buy.” All I have to say is I agree 100%, properties are cheap in many areas of Brevard County as well as the entire state of Florida.

Now is the time for investors to scoop up these properties priced drastically below market value. My long time experience as a property manager not only helps investors determine where to buy for the best rate of return, but I am also able to provide the services of managing properties and help protect their values. By conducting regular inspections, my team and I are able to determine if the property is being maintained and to check for issues tenants may not even realize are problems.

With all of the short sales and foreclosures there is a growing need for rental properties. People coming out of distressed sales need a place to live. Most of these people make excellent tenants, they’re just victims of the economic disaster.

Why should you buy a rental property? Because the time is ripe to buy not one, but maybe two or three rental properties. When the market rallies back to stability selling them should produce a very nice profit.

 

Link to the article:

http://www.noradarealestate.com/blog/why-you-should-buy-a-rental-property/

 


ESTOPPEL…NO, NOT PIG LATIN

     Let’s say you’re a landlord who’s got a tenant that’s been paying late for a few months or usually pays half her rent on the sixth (after the fee start date) then pays the rest at the end of the month.  You accept the partial payments because, well, gosh darnnit, you’re so nice and you feel sorry for the renter. She comes up with sob stories and excuses that are always out of her control.

On the seventh month, you get tired of the constant late payments, whining and excuses.  So you start eviction procedures and wish her well. 

     In court, you see an attorney by her side; she’s looking pretty happy and snappy. She looks at you and winks.  Her lawyer pipes up and asks the judge to throw out the case based on the doctrine of Estoppel. The judge agrees. The same result often happens when the property manager constantly accepts partial payments.

     Courts will rule that the doctrine of estoppel will apply if : 1. Words and admissions, or conduct, acts, or all combined cause another person to believe the existence of a certain state of things 2. In which the person speaking, admitting, acting and acquiescing did so willfully, culpably, or negligently, 3. By which such other person is or may be induced to act so as to change her own previous position injuriously. What does that mean? If the property manager is giving the impression to the tenant that the terms of the lease need not be followed, then the landlord seriously jeopardizes her ability to enforce the terms of the lease.

     So, in the future, follow the rules of the lease term agreements to the letter.  No matter how sorry you feel for the renter.  You may be bosom buddies longer than you wanted.


WHAT’S IN A NAME?

When you, as a landlord, have people interested in a unit, you’re maybe seeing dollar signs in rent.  Maybe you’re thinking of increasing the rent every few months.  Or maybe you have a problem tenant who is after you to continually reduce the rent.  Guess what?  There is something to protect each of you.  It’s called a “Lease”. 

     Neither party should be wary of a lease.  It helps lay the ground rules for tenant, owner, who is responsible for what, when and where.  There are different types of leases: a one year lease may provide for a lower rent (a rent discount or concession) for the first month or months to induce a rental. A yearly lease may provide for higher rent with an automatic annual renewal or a roll over to month to month tenancy. A multi-year lease may provide for a rent increase at the start of each new lease year.

     There are many areas which the lease can cover for both the tenant and landlord.  For example, when leases provide for periodic changes to the rent, are clarity and notice.  If the rent change is based on something other than a dollar amount (e.g., the monthly rent shall increase to market rent), then the terminology (market rent) must be clearly defined.  A lease providing for an initially lower rent should clearly state if it is a one time or continuing concession, if the total concession amount is applicable to the initial month(s) or spread over the entire lease, and if it is recoverable if the lease is breached.  The resident may be unwilling to renew the lease. If a lease term expires and the resident remains in possession and continues to pay rent that is accepted by the landlord, then a month to month tenancy is established at the old lease rent amount.

     For more information and help in drafting a lease, please see an appropriate attorney.


GOING, GOING, GONE!

Evictions:  everyone loves them!  Residents enjoy seeing the writ of eviction taped to their door, Sheriff’s deputies enjoy serving papers to weeping, hysterical parents and managers of the residence enjoy confrontation it brings.  

     No one, I repeat, no one enjoys evictions.  It is a last resort for those residents who have failed to pay rent or have been such horrible, terrible people that they must absolutely leave the premises: This time by force (legal and otherwise).  Maybe they didn’t pay rent the past three or four months, or their checks continually bounced; maybe they have had complaints racked up against them for housing, noise or litter violations.  Maybe it was a combination of everything. 

     For whatever reason, now you’ve got to start the proceedings for eviction.  You post the notice on their door…and nothing happens.  Did they ignore the posting?  Not see it?  Are they not in the premises anymore?  So, you look in the unit and it’s as if they just stepped out for milk and bread.  Their furniture is still there, clothes still in the closets, food in the kitchen.  What now?

     Legally, there are steps you should take.  First and foremost, review.  Go back through your files, and make sure that the eviction was not performed in error, and do whatever it takes to contact the evicted resident. Do everything in your power to contact the evicted resident. Can’t locate the resident and everything’s in order?  Then you and your staff can remove the belongings to the property line.  The last thing you need is for an evicted resident to get out or jail or an institution, only to discover that you took all their personal property to the property line and that it is now all gone.


POA? No, Not “Harry Potter: Prisoner of Azkaban”

     You’ve got a prospective tenant arrive at your door wanting to lease your house that you just put on the market.  It’s a well-dressed man in an expensive looking suit so you think you’ve hit the jackpot.  No parties, no damage to the condo or house, great upkeep and no problems.  They look at the house or condo, you go back to the office and voila: they pull out a POA:  Power of Attorney for someone else who isn’t there to sign the lease.

     You think “ok, this looks official” and it turns out the man is an attorney for a firm in town.  You draw up the paperwork and he signs his name and “POA”.  You’ve seen this done on checks and other official paperwork, so you take the down payment and first months rent then hand over the keys.   Now you’ve got this niggling little doubt in the back of your mind.  Was it legal? 

      Florida Statute 709.08 sets forth the law regarding Durable POA documents in Florida drafted after October 1, 1995. This statute authorizes the attorney in fact to handle real estate transactions. In fact, it authorizes the attorney in fact to sell the house of the principal! Section 709.08 (1) states that a durable power of attorney is a written power by which a principal designates another as the principal’s attorney in fact. The section further adds that with the correct wording, the Durable POA can survive the subsequent incapacity on the part of the principal.  So in this instance, you are in the right.

     Here are some more Florida Statues for POA: Section 709.08 (11) states that the unreasonable refusal of a third party to allow an attorney in fact to act pursuant to the power could subject the third party to liability for attorney’s fees and costs if the third party is sued and loses in court. That dollar amount could be quiet substantial. It is best to call your attorney if there is any doubt in how you should proceed before refusing to allow the attorney in fact to act. As you know, litigation can be very costly! You should also be aware that Florida recognizes the deployment-contingent POA. Section 709.11 of the Florida Statutes requires a property manager to accept a valid power of attorney that is signed in advance by the principal which takes effect once the principal is deployed by the military.