Good morning, Everyone!
Here is your weekly 5 Minute Friday, highlighting a couple of the questions or issues posed to me this week.
From Peggib: If a tenant moves out without telling you, cleans out cabinets, closets etc. and leaves the key but also leaves some crappy furniture behind, are you required to store said items or can you just haul them away? In this case, the tenant was a tenant at sufferance, but does that make any difference in your responsibility?
My Response: Peggi–Thanks for the question. You just brought up a situation which almost every landlord and property manager has found themselves embroiled in at one time or another. This falls into the category of possible abandoned personal property. However, it’s not always so straight forward. Keeping in mind this is certainly not legal advice and may conflict with the State or local ordinance where your property is location, here’s what I’d suggest:
- Reach out via a phone call to the tenant and confirm with the tenant their intention of leaving the personal belongings.
- Ask specifically if they forgot to come back for one more trip to retrieve them or if their intention is to abandon the items.
- If they say they forgot them by accident, arrange a time for them to come retrieve them.
- If they say they do not want them, ask them to send you an email to confirm they are permitting you to dispose of them as you see fit.
- If they will not respond via a phone call, send them an email in attempts to get the same type of response.
- If they will not respond via phone or email, and assuming you don’t have their forwarding mailing address, mail them a letter with the inventory description to the property address where they lived (Certified Mail, return receipt requested), and inform them they have xx number of days to contact you to retrieve the items. If they fail to come get them, you will plan on disposing of them after that time.
- Check with a local real estate attorney who specializes in landlord/tenant statutes for your specific area to ensure you don’t have additional requirements to hire a Warehouseman company to take the items and store them until resold or retrieved.
From Rob: If someone wanted to start buying properties and lives in a state that isn’t landlord friendly, how should they get started?
My Response: Rob–Thanks for your question, too. The sarcastic part of me wants to say “Move to a less Draconian part of the country. Duh!!!”
Ok, in all seriousness, investing in real estate is similar in many ways to any type of asset class investing. It all boils down to Risk and Return. If you live in a State that isn’t landlord friendly, but still want to invest in that State for geographic access/convenience, then analyze the following criteria:
- Which components of the State or local ordinances or court system is not landlord friendly?
- These unfriendly components–are you able to quantify their costs to prospective investment pro-formas? If so, then plug and chug these costs as contingent expenses or contingent liabilities into your P&L projections to see how they impact the results.
- Ask around to other landlords and investors (keypoint–profitable and successful ones) what they see as the components and if they add in these contingencies. After all, there’s no reason to reinvent the wheel if others are achieving success already.
- If the risk is tolerable and the projected returns are acceptable and clear your hurdle rate (whether that is Cash on Cash return, IRR, NPV, ROI, ROE, etc etc….), then pull the trigger and ride the bullet.
- If you’ve done all the homework and you just cannot logically or emotionally convince yourself to pull the trigger in that part of the country, then the next logical step is to investigate opportunities to invest in areas outside of your State. And that is the beauty of our real property investments and the true beauty of our Constitutional form of government–you have property rights across all 50 States.
As always, please let me know about your questions or issues on Twitter @DanBaldini and put #5MinuteFriday in the tweet so I can search for it or by posting a Reply Comment on these posts.
Here’s to your pursuit of your Financial Freedom!
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