Ep 7: Rental Property Considerations

House At Work Home Repair Clinic

Jim and Peter discuss common problems experienced by owners of rental properties.

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Jim:                      Hello everybody, and welcome to the HouseAtWork.com Home Repair Clinic podcast. Jim Salmon here along with …

Peter:                   Peter Schick.

Jim:                      How are you today?

Peter:                   Doing good, doing good. Another day, another day.

Jim:                      You know, we were going to talk about rental … We’ve dabbled in it, a little bit. About rental property and the landlord business. Everybody in America wants to be a landlord.

Peter:                   Yep.

Jim:                      “Oh, instant millionaires!” You know?

Peter:                   Yeah, everybody says that but there’s a lot more to it, and we’re gonna get into that. There’s a lot more that goes into being a landlord, buying rental properties. Some of the considerations you have to take. I’ve had some as well, I don’t know about you, Jim.

Jim:                      I have one rental property right now. I have divorced myself of that whole business.

Peter:                   (laughs)

Jim:                      But I have one. And okay, the tenants been there forever, and they pay.

Peter:                   Yeah, why not?

Jim:                      And I did all the modernizations years ago, so I’m good. I make money on it. But it’s not for everybody.

Peter:                   No, it’s not.

Jim:                      As a home inspector, I do a lot of inspections on doubles, triples, four families, big apartment complexes.

Peter:                   Yeah, big commercial complexes. Yeah.

Jim:                      And even, like, a double. People don’t realize the minute they buy that house that has a tenant in it, they’re responsible for a hundred things. The locks on the door, for instance. You know, when a house changes hands …

Peter:                   You’ve gotta change the locks!

Jim:                      You change the locks. If you don’t, you don’t know who has keys.

Peter:                   Exactly.

Jim:                      I mean, that’s a no brainer. If somebody breaks into somebody’s house, the day of closing, you now own it. They’re suing you for five grand, for their stuff is gone. And, you get into court and the first thing the judge says is, “Well, did you have control of the keys?”

“Well, no. I was gonna get to it.”

Boom, done. You’re guilty.

Peter:                   Yep. Boom.

Jim:                      And the same thing goes for safety issues. How many times every year do you see a video of a house fire where they’re going through, and the smoke alarm is hanging down?

Peter:                   Yeah, they don’t check the fire alarms, or the smoke alarms, or even something as simple as people slipping on the sidewalk. Or on the stairway, or something. Anything like that you can be held liable. Well, not trying to scare anybody from it, but just realize there’s risks associated.

Jim:                      No, we’re just trying to lower the price of property so we can buy them.

Peter:                   Yeah, exactly.

Jim:                      One of the things too, that I tell all my clients buying rental property is that, well, first of all smoke detectors, carbon monoxide detectors. And there should be a fire extinguisher mounted to the wall in every kitchen.

Peter:                   Yep. I provide that for each one of the units, is they have a fire extinguisher. Say, “Hey, keep this in the kitchen here.” I should have a wall mount for it, but typically I’ll come and visit them every now and then, and I’ll see it in there. They’re usually pretty good with it.

Jim:                      You know, I love it when I’m going through and inspecting a building that’s a rental property, my client buying it is there, and typically the person… Sometimes the person that’s selling, not the real estate agent, but the guy that actually owns it now that’s selling it is there too. And you walk into a house where the utilities are half separated. The people pay for the gas …

Peter:                   (laughs) They’re paying for somebody else’s!

Jim:                      Yeah, they pay for gas, heat for their furnace. But the electrical isn’t separated, so it’s electrical for the whole building. Landlord pays electrical.

Peter:                   So, it would be … I’ve seen it where you have, say, it’s a duplex. And then you have the electric separated quote, unquote. But, you’ll have one of the units have electric that has like, plugs that’s attached to the other units.

Jim:                      The other side, that’s shared metering.

Peter:                   Yes.

Jim:                      And that can be an expensive proposition.

Peter:                   Yes, it can.

Jim:                      To change, or if somebody discovers it, how do you litigate who owes who what?

Peter:                   Exactly.

Jim:                      But the one that I love the most is that the gas is separated. So, there’s just … Say, it’s a double. There’s two gas furnaces, two gas meters. So everybody pays their own. But there’s one electric service for the house, and the landlord pays the electric as part of the rent. So I go in there and on one side, there’s five electric wall heaters plugged in.

Peter:                   Oh, yeah, and the windows open.

I mean, you’re setting yourself up as a landlord to just get screwed over if you are the one whose paying the electric, or even sometimes the heat. Like, “Let me turn the heat all the way up to 80 in the middle of the winter, and then leave the windows open and everything else.”

Jim:                      Yeah, people just … when they’re not responsible for the buck, they don’t give a rats rear end.

Peter:                   Yeah, they don’t care. They will just totally, yeah. You’re paying for it, so they could care less as far as they’re concerned.

Jim:                      The other thing with being a landlord. Do you allow pets, or don’t.

Peter:                   Yeah. That’s actually and interesting question, because I’ve had it where I’ve allowed pets, and there’s been times where it hasn’t been an issue. And then there’s been times where I really, really, really regretted it. And it’s kind of a case by case basis.

And the reason it’s case by case, usually I meet … It’s really how I feel about the tenant, like what the price point is for the apartment. If they’re somebody who seems responsible, who has a good job, who … It’s not a puppy, that’s a big thing. Like if it’s a puppy, or a young animal. A kitten or something.

And guess what, it’s gonna learn how to get housebroken in your place. And that’s gonna cause issues.

Jim:                      You don’t want that.

Peter:                   Yeah.

Jim:                      If an apartment has hardwood floors or something, it’s easier to repaint.

Peter:                   Yeah, it’s much easier.

Jim:                      Carpeting? Forget about it. Animals ruin carpet.

Peter:                   Yeah, forget about it. They destroy it.

Jim:                      Permanently.

Peter:                   My animals destroy my carpet. (laughs) I mean, I have to replace some of my carpet because of them. Yeah, no, it’s pretty case by case. Like, if I get a good feel for it and I meet the animal. If I do accept it, I wanna meet the animals kind of deal.

Because I don’t want make sure there’s some vicious … I’m letting some vicious dog or something stay in my house. I wanna make sure it’s personable, and it’s older, and it’s everything else.

Jim:                      One of the real important things, if you’re getting into the landlord business, is to be somewhat hands on. To be visible there. It’s the one where people run into trouble. Where the guy lives in California that owns this building, and they have property management companies.

Peter:                   Now, there’s a lot I need to … I could talk about this all day, especially with these guys who have property management companies that are running their stuff. These property management companies, they’re incentivized for turnover in many ways. So, say I live in California. I have an apartment complex in, I don’t know, Detroit or whatever.

Most property management companies, they get paid to fill the unit, and then they get paid to evict a tenant. And then they’re getting paid between eight to ten percent of your gross, whatever you make on it. So, if they just keep kicking out a tenant, putting in a new one, kicking out a tenant, putting in a new one …

Jim:                      They’re making a fortune.

Peter:                   Oh, yeah. They’re making money hand over first while the person who owns it, they’re getting screwed. I see that all the time. I mean, it’s like it is kind of a perverse incentive they have, to have a lot of turnover.

And that wears on the place, and that causes all sorts of other issues as well.

Jim:                      I’ve been in a couple of houses where … A four family particularly comes to mind, and so I’m over there doing the inspection. I go through three of the apartments, and I get to the fourth one and there’s police tape on the door.

Peter:                   Oh, jeez.

Jim:                      Meth lab.

Peter:                   (laughs)

Jim:                      Former meth lab.

Peter:                   Are you joking me?

Jim:                      No, I’m not! I’m dead serious.

Peter:                   A meth lab. Like, there’s a ‘Breaking Bad’ meth lab. Oh, wow.

Jim:                      Like, “I’m not going in there! This home inspection stops right here at that door! I’m not going in there.”

Peter:                   Done.

Jim:                      Well, first of all I know nothing about drugs. I mean, give me drugs, I’m not into that.

Peter:                   Yeah.

Jim:                      But the chemicals and things they use contaminate everything!

Peter:                   Oh, yeah. That’s done.

Jim:                      I mean it’s the walls, the carpeting.

Peter:                   That could contaminate the entire house. Actually, from what I understand, that kind of puts it in a strange legal standing, the ownership of that house.

Jim:                      Yeah, there are some states that the real estate folks are not even required to, even if they know about that stuff, they’re not required to. But an ethical person would, I mean, you wouldn’t want to not tell somebody that.

Peter:                   I wonder what the court case that actually created that, in some states, where it requires you …

Jim:                      We live in interesting times.

Peter:                   Yeah, how did it get to that point, you know?

Jim:                      Well, we live here in and around Rochester, New York and the city of Rochester is anti-business. There’s no question about it. Right down the middle.

Peter:                   Well, it’s really high taxes is what it is. The property taxes are incredible here. Monroe Country, it’s like four percent. I mean, that’s almost unheard of anywhere.

Jim:                      I will say, within a mile of this building we’re in, there’s gotta be fifty zombie houses.

Peter:                   Oh, yeah. Maybe even more.

Jim:                      You don’t have the incentive to buy them, to fix them up, to rent them. Because the city comes down on you with a thumb like crazy. Then we have this thing here called the net office. And I look at that as nothing more than jackbooted thugs, I mean they’re nuts. Those people are crazy. And all they want to do is live out some dictatorship type of thing. I just wanna choke them all!

Peter:                   Why don’t you tell us how you really feel, Jim?

Jim:                      Drive me nuts.

Peter:                   What gets me is that we want to create, and we’re getting into some of the local stuff. We’ll move on quickly. I just want to state one point that I’ve noticed is they keep wanting to create more housing. It’s like, “If you build it, they will come.”

If we make this really nice apartment, really nice condos over here, it’s going to make the neighborhood better.

And it’s not housing shortage here, I think there’s plenty of housing. I mean, it’s just a matter of an economic thing. It’s a matter of bring more jobs here, so then there is more demand for housing.

That’s one of the things I’ve seen.

Jim:                      Alright. You know what, right now I’ll leave that one alone.

Peter:                   We’re gonna go off on it, I wanna hear. It’s another one of those money taking schemes that you were talking about.

Jim:                      I don’t know about you, but I have a fair amount of pride in my house.

Peter:                   Oh, yeah.

Jim:                      And, you know, I have my …

Peter:                   You have to, that’s your castle, you know?

Jim:                      I have my wife mow the lawn frequently.

Peter:                   (laughs)

Jim:                      And I take pride in it. And when I come up on a house where clearly pigs live here …

Peter:                   Oh, yeah.

Jim:                      … And it drives me nuts! I get there to do a home inspection, there’s dishes piled up to the ceiling, place is a mess.

Peter:                   That’s even worse with multi families, because like we had eluded to earlier, if somebody’s not there it’s like, “What do I care?”

And some of these people, it’s so bad. Where, okay, yeah. Say I do keep the security deposit, that’s not gonna cover the damage a lot of the time that you’ll see when somebody lives like that.

Jim:                      I come to a house and it looked like wallabys lived there, and it’s torn up. Everything’s a mess, there’s junk all over the place. And there’s a sign that says, “Please remove your shoes.”

I don’t think so.

Peter:                   Yeah, I’m gonna step on something.

Jim:                      You know as a landlord, what I see happen all the time especially in the lower income rentals is people get in trouble a lot. I go to court a lot and testify for people, and sometimes I have to sit through a bunch of landlord/tenant stuff downtown.

Peter:                   Yeah.

Jim:                      And municipal court and it’s like, sometimes the system breaks down, and people don’t have money to pay and whatever. But they’ll put out every stop. Like, “I can’t afford my rent, but there’s lead paint here and it’s all friable and I’m having my kid tested for lead.”

So it’s going back and forth.

Peter:                   See, the thing is with the lead piece, it’s the disclosure. You just have to let the tenants know a lot of the times. Part of federal law, where it’s, you give them that little pamphlet. Like, “Hey, this is how you deal with lead.”

If your house is built before 1978. It’s 1978, right?

Jim:                      Yeah.

Peter:                   Yeah, if it’s built before then, there’s a chance that there’s lead. You just have to have them sign that disclosure and give them the packet and be like, “Hey, look. There could be lead paint here, just FYI. If we have any tests, here’s the tests.”

But that doesn’t necessarily stop somebody from trying to twist it around.

Jim:                      What they do is that if they get behind, sometimes they’ll try to do anything they can to stave off the eviction deal. So they’ll call the net office and say, “There’s friable lead here! The window seals are all peeling, my kids are here, and I found my kid playing with a paint chip.”

And the other thing is asbestos. And there’s a ton of that out there.

Peter:                   Yes, you see that wrapped around pipes and everything else. I’ve seen that in a bunch of the places I’ve been in.

Jim:                      So, that’s a tough one.

Peter:                   I mean, as long as you can seal it. A lot of the time that’s the big thing. It’s not necessarily abatement of the asbestos, it’s especially around pipes. If you just seal it, get somebody to seal it, exactly.

Jim:                      There’s paints, there’s approved encapsulating tapes that you can use.

Peter:                   Yeah.

Jim:                      They’re clear, we’re not trying to hide that it’s here, but we’ve encapsulated it. That’s fine.

You know, one of the things too that drives me nuts is a lot of these buildings have old windows. Single strength glass windows.

Peter:                   Yep.

Jim:                      From the 50’s, 40’s, 30’s, 20’s, whatever.

Peter:                   Oh, yeah. I’ve seen that. I have one of mine that is still like that, yeah.

Jim:                      And they’re all painted shut.

Peter:                   (laughs) Well, they do that because of the certificate of occupancy. Because a lot of the time the inspector is going to go in there, and that is where they look for the chipped paint.

Jim:                      No peeling paint!

Peter:                   Yeah, and so they’re like, “Well, maybe if I just paint it shut they’re not gonna look in there.”

That doesn’t really solve the problem, you know?

Jim:                      When I walk in a building, my main concern for all my clients is security. That’s the number one thing.

Peter:                   Yeah, of course.

Jim:                      Safety and security.

Peter:                   That comes first.

Jim:                      So I’m thinking, there’s a house fire in the kitchen. The only door to get out in that area of the house is the kitchen door, so you’re not going that way. The house is on fire, it’s full of smoke, whatever. You go over and the windows are all painted shut, you can’t get out any of them.

So, what I tell everybody is that I want to see that window open and operating. Now, I don’t care if you go and buy a new vinyl replacement window. That up to you if you want to do that.

Peter:                   Yep.

Jim:                      But, that’s gotta be operating. You’ve got to be able to get out the windows in an emergency.

Peter:                   I agree you have to have that. And that’s just people cutting corners from what I’ve seen.

And to get, I know here in Rochester, to get that certificate of occupancy you need to have the operating windows. That’s not just your standard, that’s also the city standard. And like I said, I just think that people try to bypass. Because it a lot of work to scrape all that paint, and then repaint it.

Because you have to take apart the window to be able to do that, a lot of the time.

Jim:                      Yeah, it’s terrible. And you still have a window with an R value of .5, and your cheapest vinyl replacement window starts at 3.0, so it’s …

Peter:                   Yeah, you know, you’re losing heat on it, and it’s just all around a big issue. So people are just, “Oh, I’m just gonna paint it shut.”

Jim:                      I think that eventually the code will, and we’re very close to this in New York State now, that sprinkler systems will be required for certain multi family homes.

Peter:                   Like how many units?

Jim:                      I don’t know specifically on that, but I’ll have the crack staff at Home Repair Clinic … Get back to the wonderful staff at HouseAtWork.com.

Peter:                   I’ll take a look, I’ll do some research on my end.

Jim:                      Yeah, we’ll research that.

Peter:                   Because that’s interesting. Because that adds another whole can of beans that you have to consider, for the larger units.

Jim:                      Many times I come to inspect a rental property for somebody, whether it’s a double, triple, whatever it is. And the utilities aren’t separated, so it can be expensive to do electrical. It can be expensive to do gas.

Peter:                   And that’s going to make it harder to sell, because that’s another liability that the landlord’s gonna have to put up with. They’re going to be covering that, and it’s going to come from somewhere.

Jim:                      And the building’s for sale, the guy’s had it for 20 years. He’s milked it like a sow, and then he’s done nothing to it.

Peter:                   Oh, jeez.

Jim:                      The fire escapes are all rusted and loose.

Peter:                   Yeah, seen that.

Jim:                      And my client isn’t requiring the current owner to get the certificate of occupancy needed by the city, at closing. And I’m looking at him going, “Have you lost your mind?”

Peter:                   I don’t understand that. I don’t understand that. I have people who don’t even do engineer’s inspections who’re like, “Hey, this is a 20 unit building. Yeah, you know, no engineers inspection.” I just kind of have to do a facepalm. I don’t understand why, I don’t even know if I want to really ask, whatever.

But it really confuses me because I can’t even imagine myself throwing down like seven figures for a place, or more, and not even doing an inspection. Whatever, different strokes, different folks.

Jim:                      And if you’re buying, it’s normally accepted, say it was built in the 50’s. Just for the sake of a time frame. And now, the first 20 years the bathrooms and kitchens, we came up to 1970, and ’70, ’75 when they were remolded. So now we’re way into the 2000’s and they still have these 1970 kitchens and bathrooms in there, it’s time to upgrade them.

And if you’re buying a building with 30 units, it could easily …

Peter:                   You’re looking at five to ten for each of one of those units. Five to ten grand.

Jim:                      Right, exactly. I mean, that’s a monumental amount of money to spend to upgrade these.

Now, you might be able to take the rent from 800 to 1200, and that’s a whole nother matter. But still, it’s like any other investment you have keep it going.

Peter:                   You have to put a little back into it to get more. And one of the things that I’ve seen, from working with clients or people who are interested in buying rental properties, or income properties. Or whatever you want to call them is they say, “Well, I want it in a really nice neighborhood.” But they always want a really high cap rate, so a really high ROI.

It makes like, “I wanna see like a 10, 15 percent cap rate on that.” You mean, it’s just gonna make 10 to 15 percent of it’s value every year. And you’re just not gonna have it in a really nice area.

Jim:                      Yeah, very rare.

Peter:                   It’s risk, reward. It’s that balance. If you want really high returns, you’re going to take a lot of risk. If you don’t want to take a lot of risk, you’re not going to get very high returns. And that’s a pretty fundamental things that I always feel like I have to educate clients on.

And they’re like, “Oh, well, I want really high returns!”

I’m like, “Look. Are you fine with being a slumlord? If you’re fine with that, and you’re fine with taking on a lot of risk. Somebody maybe tearing out all the copper piping in your duplex.”

Like, one day I could show you a bunch of places.

Jim:                      There you go.

Peter:                   But, I don’t know if you really wanna take that. Because it’s a bit deceptive, those high returns. Because you’re going to be spending a lot more in maintenance, you’re going to be spending a lot more in turnover. You’re going to be spending a lot of money on pretty much all of those little ankle biting issues that you’re gonna have, if you own a place like that.

Jim:                      The one I like the best is the guy or gal buying their first rental property.

Peter:                   It’s a trial by fire.

Jim:                      Exactly. Some are good, some have done their homework. But my best advice to people like that is go downtown to your courthouse in the city. And go into landlord/tenant court, and just sit there for a day and watch what happens. You get a big time education.

It’s very difficult to collect money sometimes if somebody hasn’t paid you, they go back and plead with the judge. I mean, they could be there months.

Peter:                   Oh, yeah.

Jim:                      And now they’re just accumulating all this debt with you.

Peter:                   I could tell you a million different stories about nightmares with tenants. One of them was in our previous episode, about mine.

Jim:                      That was a great one, yeah.

Peter:                   That one, and that just focuses. That makes me want to bring up the point, you have to screen, screen, screen. Alright? You have to check the credit, you have to check their income.

Now, a way to check income. Say, it’s like a one bedroom. For like 600 a month, that individual should be making around 1800 a month in take home income for them to qualify.

So that’s one of the things that a lot of people don’t understand. If they’re spending over half their paycheck on their rent, chances are they’re going to default on you.

Jim:                      At some point, some emergency is gonna happen, or whatever.

Peter:                   Yeah, something is gonna happen and you know what? They’re not gonna prioritize you. They’re gonna prioritize whatever else they have going on in their lives.

So, no more than a third of their income should be going towards rent. And dependent on the kind of unit, the credit score piece could be flexible. If it’s a really nice unit, I’d say above 650, 700. But if you’re starting to look at something that’s, ahhh, I’m usually above 600 I’ll go for that.

But there’s no hard and fast rules. I’ve heard a bunch of people like, “Oh, I don’t take over 700.” But the thing is, is that if you do have a really good credit score, why are you renting to begin with?

You could buy your own house, kind of deal. So it runs into some other issues.

Jim:                      Well, some people don’t want the responsibility or they’re short termers in a certain area, or something.

Peter:                   That’s true.

Jim:                      But you’re right on that. You know, nightmare scenario, the landlord number 12, is you rent to somebody and the next week there’s like six people living there.

Peter:                   (laughs) I’ve had that happen.

Jim:                      That’s a nightmare.

Peter:                   And, the thing was, he was a former military guy.

Jim:                      There’s a trend, there.

Peter:                   Well, actually, I’ll say this. These guys are the bad apples. This is the one bad apple. The other guys, one was an active duty recruiter I rented to. He was amazing. I mean, he paid on time, very clean and everything.

I had another active duty navy guy. Awesome, great dude. This guy, he retired, and he was from the army. And he lived with his girlfriend, and the next thing I know, his cousins living there.

Jim:                      Yeah.

Peter:                   And his brother. And I’m like, “Hey, man. You just, you gotta move on.”

Jim:                      You gotta have a good lease to cover that stuff.

Peter:                   And I’m like, “Look, your lease is expiring here really soon, so I don’t feel like I’m going to renew you. This isn’t working out.”

Jim:                      Boy, I’ll tell you. You can tax a building services too, to a horrible level, when you have so many people in a building like that. And it’s not designed for that stuff.

Peter:                   And the thing was, I started seeing these people moving in the last few months of their lease. And I’m like, “Okay, this is … I see where this is going.” You know? Just gonna cut this off before it gets any worse, here.

Jim:                      Well, I think that you cannot be squeamish as a landlord. You have to be … There’s two types of people in the world. There’s type A people and type B. And there’s a few type AAA people.

Peter:                   (laughs)

Jim:                      Which are ultra whatever. A type B person, laid back, non-confrontational. Doesn’t make a good landlord.

Peter:                   No, you’re gonna get stepped on.

Jim:                      You need to know what you’re doing with this.

And I’m not trying to talk anybody out of it, because there’s lots of good opportunities there. It’s a business decision like anything else.

Peter:                   Yep.

Jim:                      But, the city’s against you, the tenants against you, everybody’s against you. Your insurance company’s against you.

Peter:                   It’s all about finding the right person, I find. If I can actually get along with the person, and they make good money, and they have good credit, it’s gonna be fine most times.

What I’ve seen … actually, I have one of my places. The two tenants are very good tenants, but they don’t get along with each other. And now I start getting …

Jim:                      Yeah, that can be really bad.

Peter:                   Now I’m getting stuck in this stupid shouting match between these guys. It’s like, “You know what, can you be adults?” (laughs) “Can you just kind of work things out?”

Yeah, it gets annoying.

Jim:                      One of the things that drives me crazy. Say, you have a little house in the city. It’s a one family house and you rent it, okay?

Peter:                   Yep.

Jim:                      So you rent it out, and you tell the guy, “Okay, new lease. It says you’re responsible for the lawn maintenance. You’re responsible for your own snow removal.”

Peter:                   Yep.

Jim:                      Like, “It’s your house.”

Peter:                   What I really like is if you say, “Hey, you’re responsible for your snow removal.” Oh, then the first big snow comes and it’s like, “Well, are you gonna come here? Is a plow coming?” No, man.

Jim:                      No plow, you’re the plow.

Peter:                   We talked about this, dude. Yeah, get your shovel, bro.

Jim:                      But you know, in the city if you let your lawn grow they’ll give you a ticket.

Peter:                   Yep.

Jim:                      I had a house once where I would routinely park on the lawn. It was my own house, I wanna park on my own lawn.

Peter:                   Yeah, exactly, why not?

Jim:                      And I got a ticket. From the net office.

Peter:                   (laughs)

Jim:                      You can’t park on your lawn, you can’t.

Peter:                   You’re gonna tell me what I can do? Oh, yeah.

Jim:                      If we were on my radio program I would have my producer pull up these machine gun sound effects, and explosion sound effects. I’d go nuts! I mean, it’s nuts.

Peter:                   I don’t understand why you can’t do that, park on your own lawn.

Jim:                      It’s … I don’t know.

Peter:                   I can understand like, you’re not pulling apart a car and you have all the car parts all over your lawn or something.

Jim:                      That’s where it all starts, I think. Working on cars in the road, and out in front of houses and that kind of thing.

Peter:                   Yeah, I’m sure something happened. Somebody got hurt, and then here we go.

Jim:                      The problem with that deal, was Mrs. Peabody Nosey kept calling the net office and saying, “They’re parking in the front yard again!” Well, you know, I think she just disappeared one day. And I didn’t do it.

Peter:                   There’s always people like that where like, “Oh, you can’t do this.” I’ve actually been called about almost the exact same thing. I had a tenant who parked his motorcycle on the lawn, and the people from across the street called in on that.

A motorcycle, you know, really.

Jim:                      There was an incident not too long ago that I got involved in. I get involved in some landlord/tenant stuff, too. Somebody will hire me to prove something one way, or whatever. So, I get over there and it’s a 30 unit apartment. Old building.

Peter:                   Yep.

Jim:                      The people that own it, I know them. THey’re good folks, and they run a nice, tight ship. Good maintenance. They do it how I’d like to see it done. And there’s a fence between their parking lot, and the house behind them.

And this fence was an old fence, it was 25 years old. It was kind of in dispute who really owned the fence.

Peter:                   Yeah, it was kind of right on the line. You weren’t sure which one it was.

Jim:                      But the people in the house said it was their fence.

Peter:                   I see.

Jim:                      So, these folks had their parking lot repaved. And somehow the guy that owned the house, said that the fence is now leaning over. That the paver guys ruined his fence. Of course, the people that owned the building said, “No, that fence has been like that forever.”

So I go over there and I analyze it, take pictures, write a report and all that. And then they go to court, and it’s a horrible situation.

Peter:                   He said, she said, that’s all.

Jim:                      Yeah, but the system is stacked against business people in the cities. Period. I don’t care what city it is.

And I know it is here. Well aware of that.

Peter:                   And they’re tenant friendly, is often what it is.

Jim:                      Tenant friendly this, as far as I’m concerned.

Peter:                   Yeah.

Jim:                      First of all …

Peter:                   I’m not saying I agree with it. I don’t like it any more than you do.

Jim:                      Perhaps I did go over the top with that. But, you know, it is one of those things where business is always evil. As far as, not getting into politics at all, but a lot of these cities are run by folks that believe that people should have everything handed to them.

Peter:                   And you don’t earn it.

Jim:                      And I’m not on that, I’m not on that plane. But these things sometimes it’s preconceived deal. You go to court even with good information and you end up losing, so.

Peter:                   Yeah. I can’t even understand why they would even hire you about the fence thing. I don’t want, say, you hire a surveyor to figure out whose fence it actually is. Because that alone even seems like it’s in dispute.

Jim:                      What happened was they went to court and lost the first time. Then they appealed.

Peter:                   Oh, jeez.

Jim:                      And when you go to appeal, the judge isn’t really judging the case again. She’s judging the judge, and how the previous judge handled the case.

Peter:                   Yeah, I see.

Jim:                      And this particular judge that they pulled downtown, I’d been in front of her ten times. She’s insane. But I have to give her credit, she will not let those people leave without solving this.

What happened was, at the bottom line of the fence was the folks that owned the property agreed to replace the fence, and then take ownership of it.

Peter:                   I see.

Jim:                      And the other guy doesn’t have to worry about it. He gets a new fence to look at, whatever.

Peter:                   There you go.

Jim:                      They solved it, my folks had to pay money obviously, for a fence. But there was no monetary award then.

Peter:                   Oh, okay.

Jim:                      They sued them for 3,000 dollars or so in small claims court.

Peter:                   Oh, jeez.

Jim:                      So it was, you know. But that judge is … Well, you know. Interesting. Let’s put it that way.

Peter:                   You do have some interesting judges in Rochester.

Jim:                      Yeah, there’s an old guy that is a judge. He’s way in his 80’s, he’s part time. And it’s downtown in the city. It’s a real court. But he is wonderful.

He listens to my radio show, so every time I go in there to testify for somebody.

“Hey, Jim! How yeah doing?”

And of course the other sides looking over like, “Hey, that ain’t right.”

Peter:                   We want want another judge, yeah.

Jim:                      Pretty funny. So, you know, the bottom line with landlord/tenant relationships is building relationships.

Peter:                   Yeah, exactly.

Jim:                      And you’re a pretty easy going guy.

Peter:                   That is the key. That is the key, is building that relationship. It’s having that report. Because if they look at it as, it’s a transactional piece, they’re not going to really care that much about actually taking care of your property.

If they feel like, “Hey, I respect this person and I almost consider them my friend. But it’s not like a friend-friend, buddy, whatever.” It’s like, “Hey, I actually kind of respect you, and I understand you.”

They’re not gonna destroy your stuff. Well, most cases. If you have a good report, good relationship, they respect you, it’s gonna be fine. 90 percent of the time I would say.

Jim:                      You know what happens, though, too. This is a business.

Peter:                   Yep.

Jim:                      Being a landlord’s a business, and sometimes a landlord will become too close of a friend.

Peter:                   That’s why I was trying to put that emphasis.

Jim:                      Going over and drinking with somebody, or whatever.

Peter:                   No, it’s almost like a professional relationship.

Jim:                      Horrible, horrible thing to let that happen.

Peter:                   I would say it’s a professional relationship. In many ways. It’s like having a good relationship with your boss.

You know, I’d rather have a good relationship with my boss than a bad relationship.

So I’d rather have a good relationship with my tenant, but not a bad one.

Jim:                      There you go.

Peter:                   And it’s kind of like you mentioned right there, like I’m not going to go drinking beers with you and all that noise.

But, I’d rather have there be mutual respect. Because that’s going to carry on in how they treat my property, and the place they live.

Jim:                      And the very, very worst thing that you can do. Say you’re a single guy. You have properties. Is to start a relationship with a single woman, or a woman with kids, living in one of your apartments.

Peter:                   Ah, yeah.

Jim:                      Oh my God. Those are extremely explosive situations.

Peter:                   Oh, boy. Yeah, you’re getting everything tangled in that.

Jim:                      “Where’s your rent?!”

Peter:                   It’s like, I gotta put my landlord had on. Jesus.

Jim:                      That’s horrible.

Peter:                   And you know what? You get yourself in that situation, I mean …

Jim:                      You deserve what you get.

Peter:                   Yeah, you had it coming.

Jim:                      It’s like owning a bar. You don’t drink in your own bar. You just don’t do that.

Peter:                   Yeah, if you like to drink a lot. You probably shouldn’t own a bar to begin with.

Jim:                      (laughs) Good advice.

Peter:                   That’s how I see it.

Jim:                      Well, buddy, we’ve reached the end of this wonderful HouseAtWork.com Home Repair Clinic podcast. And, hope everybody enjoyed that. Peter’s going to give you the email address if you’d like to weigh in, you’re more than welcome to send us an email with suggestions for topics. Or a particular specific question about something, you’re more than welcome to do that.

Peter:                   Yeah, go ahead and email us at [email protected]

Jim:       Hey, thanks for listening. We’ll see you again down the road for the next HouseAtWork Home Repair Clinic podcast.

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