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Better also put in the contract how often they can have repairs for $249. Well, I guess, twice a month until they hit the $500 amount you gave them for repairs. Plus the monthly fee.
Honestly, I think it's unwise to keep this tenant and worry about raising the rent in small increments as to not upset them because they aren't destructive. If I was your manger, I could screen applicants well enough to find you someone willing to pay market rent today, who wouldn't cause any damage.
And this is something the manager should have told to you. So, what's in it for them to keep this tenant? I don't see anything in it for you.
No rent control on SFD's in LA. I can raise the rent as often as I like. Agreement degenerated into month-to-month decades ago.
You can only raise the rent according to the lease and law...so no, you can't raise it 'as often' as you'd like.
If it's already a month to month lease why haven't issued them a notice to vacate so you can raise the rent to satisfy your needs?
You need to visit comparable properties in the area so you can get an idea of what you're up against. Can you charge market rent? Of course you can, but that doesn't mean you'll get it.
I can agree with much of what is said. What I disagree is separating a landlord's COL expenses from profits. I mean that's the only real reason to rent out property isn't it? To take the profits to help pay for our own living expenses???? I disagree on that, even though you're right-- they are two separate issues.
So PM co's rewire a whole house that doesn't need it w/o telling the owners? I'll have to check that very carefully in the contract. This is probably more common for absentee landlords. I live two minutes away from the house. I'll be sure to write into the contract that no repairs are to be made w/o my expressed consent. The co says their flat fee is $185/mo. If I'm watching the expenses it'll be worth it to get this couple out from around my neck.
I take blame for letting this get out of hand. Renters are just following their survival instincts. I can't blame them for putting up a fight. But if I have to fight to straighten this out I will. First thing, as someone suggested: get that heater fixed. I'm waiting for a call from the HVAC man now. I won't make a move until that is in place. That's going to cost 5 grand. How can I not raise rents with that kind of an expense? And a wall unit is very dangerous to install if there are any carbon monoxide leaks and the installers are incompetent, which 90% of them are around here.
And I was wrong about the CGT. It's not 20%; combined with California's 10% it's 30%. So that's a no-brainer.
I still can't believe landlords employ PM's if they do such a poor job.
Lazy, bad, or long distance landlords employ managers and you seem to hit two of those. When you run off a good paying tenant you will get a good dose of reality. Math is simple on this one.
1) They pay $1000 a month plus $200 for your storage.
2) PM charges you $185 a month so bare minimum you need to bring in $1385 to break even.
3) They will charge you 1 months rent to place a tenant after you run this tenant off which at $1800 is $150 a month bringing you up to $1535 to break even with where you are now.
4) Because the tenant has been there for 30 years your move out repairs will be entirely out of pocket, paint and carpet at a minimum, which could easily be near $5000+ for everything. Amortize that out at 5 years you are adding another $85, rounded up slightly, a month brings you up to $1620 a month to break even.
5) Once you add in for vacancy, you added a property manager so your rate is going to be higher than a private landlord, at a low 5% is about $90 a month bringing you up to $1710 to break even.
You are much better off just increasing the rent another $100 a month and fixing the heater before they sue you. I don't normally give slumlords advice, you are a slumlord when you don't provide heat and complain about a repair request like the drip, but I had to bring you down to reality. Your thought of market rates is flawed massively because your home has seen few to no major repairs/updates in 30 years, cabinets, faucets, toilets, and electrical to name a few, if not longer. You really need to pull your head out of the clouds and get the dollar signs out of your eyes.
OP, before you give up the idea of having your mother sell now research probate inheritance laws. Also, if your Mom is on medicare, they already have a claim on the house and any other assets.
^^^^ Yes, many posters, however noble or well-intentioned their advice may be, is off the-mark most of the time so I'll have to try to clarify several misunderstandings about what's happening:
>>>>>Better also put in the contract how often they can have repairs for $249. Well, I guess, twice a month until they hit the $500 amount you gave them for repairs. Plus the monthly fee.
Definitely. I intend to. I have heard loud and clear what others have said about PM rip-offs and as I said I didn't fall off the turnip truck yesterday. I actually have built a few houses in my time in Los Angeles (no small feat) and so know the ins and outs of dealing with conniving contractors.
>>>>>Honestly, I think it's unwise to keep this tenant and worry about raising the rent in small increments as to not upset them because they aren't destructive. If I was your manger, I could screen applicants well enough to find you someone willing to pay market rent today, who wouldn't cause any damage.
>>>>And this is something the manager should have told to you. So, what's in it for them to keep this tenant? I don't see anything in it for you.
Actually, it's in my best interests TO keep the tenants. They are a known entity and have paid their rents always on time and in solid income situations, unless the wife gets laid off or something. If I chase them out I have to spend lots of $$$$$$$$$'s to get the place fixed up. With them, I just have to keep the place running. Plumbing will be the biggest issue until I can sell. Trick is to get the rents lower than market by about 200-300 and that will satisfy them and me. $1400 ought to do it.
>>>>You can only raise the rent according to the lease and law...so no, you can't raise it 'as often' as you'd like. If it's already a month to month lease why haven't issued them a notice to vacate so you can raise the rent to satisfy your needs?
I didn't explain clearly last time. Original contract likely was MtoM because my mom never signed leases and if she did they were always 1-year. They've been in there since mid-80's and whatever lease was around then has since flown the wind. Now it's MtoM by law. LA law says on a SFD there is no rent control so theoritically I can raise as often as tenants can put up with it. PM I talked to said best way to do this is incremental increases of 50-75 every 9 months so it'll take 4-- years to get it up to market. PM will explain this to tenants to get them onboard. Better small increases over 4-5 years than big one all at once. I agree.
>>>>Lazy, bad, or long distance landlords employ managers and you seem to hit two of those. When you run off a good paying tenant you will get a good dose of reality. Math is simple on this one.
I plead guilty, not on laziness but on having a heart of gold. I knew rent was low but I didn't have the heart to raise it on the guy when he was disabled on small income. When I had conversation with them explaining the dilemma---that I was robbing my brother and mothers' estate and said we needed to do something about this he pleaded with me "Thrill, PLEASE PLEASE just wait until Oct when I get my SS. My income will go up to $2000 yr. Then I can pay more rent." So I said OK I can work with that.
So now I have the heating contractor coming over on Tue to give estimate for central heat. Good company They installed 4 other heaters for us on various properties. None have burned down.
>>>>>>>1) They pay $1000 a month plus $200 for your storage.
2) PM charges you $185 a month so bare minimum you need to bring in $1385 to break even.
3) They will charge you 1 months rent to place a tenant after you run this tenant off which at $1800 is $150 a month bringing you up to $1535 to break even with where you are now.
4) Because the tenant has been there for 30 years your move out repairs will be entirely out of pocket, paint and carpet at a minimum, which could easily be near $5000+ for everything. Amortize that out at 5 years you are adding another $85, rounded up slightly, a month brings you up to $1620 a month to break even.
5) Once you add in for vacancy, you added a property manager so your rate is going to be higher than a private landlord, at a low 5% is about $90 a month bringing you up to $1710 to break even.
All I have to do is get the rent from 1000 to 1400 and I'll be satisfied. NO mortgage so it's ALL free and clear money, except for the PM and 135/mo for relief from headaches is a bargain. Sure there'll be more repairs but everything major has already been done---roof, electrical. All that remains is plumbing and I will deal with that on a case by case basis. Half of it has already bee replaced over the last 5 years.
Bottom line, I'm much further ahead keep them and not renting to new tenants and risk getting someone who will trash the place after I invest 20K to fix it up.
Mom is not on Medi-cal. That's the one you are thinking of, Kimmie.
You cannot raise the rent whenever you feel like it. You have to follow the lease and state laws. At this point they are month to month so you need to follow the law in regards to month to month leases and rental increases ie: giving proper notice.
If you really think that the 1400 will be 'free and clear', I've got really nice bridge I'd like to sell you.
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Oh no, he can't do that...
Agreement degenerated into month-to-month decades ago.
